Extending your warranty or depleting your cash?

By Mir
September 25, 2006

First I got this from Scott:

First, I will say you are very pretty. Second, I love your site, it has a lot of good stuff on it. My question is about extended warranties. I know that usually, this is not a good deal and a waste of money. However, I have a 50 inch big screen projection TV that I bought 10 months ago without the extended warranty because that is usually a waste. Now I am getting offers of one last chance to extend the warranty. I spent about $2500 on it. The warranty is for the next 3 years for $500. Worth it? I don’t know. They claim a service call to replace a bulb is a few hundred. But lots of claims aren’t true! 🙂 What are your thoughts? Thanks!

Then I got this from Kristine:

You’ve got such good advice, I’m wondering what your opinion is on extended warranties and service plans. EVERYTHING seems to come with an offer for these now! Even my sofa, well, actually, the stain protector on my sofa – I got a call from them a week after we got it offering an “extended” warranty from the normal 1yr to 3yrs. Is that worth it?? And is it more worth it for some items, like the new dishwasher we just got that has electronics that are more expensive to replace? What about computers? I’m partial to Dell’s plan, as we’ve put it to use several times. But I don’t know… what’s your take? Thanks for all your great advice and deals!

So, I don’t know, I could be wrong, but I’m thinking y’all might want to have a discussion about extended warranties.

The short answer, of course, is put down the credit card and back slowly away from the extended warranty. Every product on the market seems to come with the option of an extended warranty, nowadays, and 99% of them are a complete waste of money. In a world where price-matching has become cutthroat, many companies make the bulk of their money on extended warranties rather than on the sale of the item itself.

And if the extended warranty was going to end up being cost-beneficial for you, well then they wouldn’t be profiting off of it, now would they?

So. My standard answer? No. No no no no no and a thousand times NO, do not buy an extended warranty.

But then I thought, hey, maybe I need to think about this some more, and make sure I’m making sense. But then I had a couple of cookies and the urge to do some actual research passed.

Haha! I kid. I had three cookies, but I also did my research. So let’s talk specifics.

First of all, check out the pointers in this article from PC World. Although they’re talking specifically about computers and home electronics, most items on the list apply to just about any high-end purchase. Most notable take-away tips from their suggestions include checking to see if your credit card does automatic warranty extension, shopping around for the best warranty deal if you do decide to get one, and breaking down potential repair costs versus the cost of the plan.

Here’s another good read by them: Extended Warranties Aren’t Worth It.

Let’s break it down by category.

Cars: No. Do not buy an extended warranty for your car. Do your research beforehand, buy a car with a proven track record of quality, and change your oil regularly and whisper sweet nothings into the dashboard occasionally.

Big TVs: Scott’s question was specifically about his projection television, and my instinct was to say no. Then I turned to CNET—my trusted source for product review info—and found this collection of user opinions. They seem about evenly split on the issue. Look; you have to break it down. What’s the average life expectancy of one of those bulbs? How many hours of TV do you typically watch in a week? I suspect you’re better off taking the money you would’ve spent on the warranty and sticking it in the “TV emergency repair fund,” but maybe you watch 20 hours of television a day and I’m totally wrong. Do the math.

Appliances: No. Again, do your homework. Buy reliable. Stick some money aside in a repair fund, if you can, instead.

Furniture: … seriously? A warranty for your furniture? There are some plans out there, as Kristine mentioned, that want to warranty your stainproofing. I have 2 little kids and it has never once crossed my mind to buy such a plan. The chances of a catastrophic staining (lord, that sounds much dirtier than I thought it would) are so slim. You’re better off shouting “You kids get off the good furniture!” and buying a bottle of OxyClean. Although I will mention, here, that it’s a good idea to pay for Scotchguarding (that often costs extra) if staining is a concern.

Desktop computers: Here is where I’m going to start some arguments. I say no to extended warranties for desktops. But I also say no to generic computers, because this is an item where you can’t afford to go with a less reliable machine. Again; do your research, buy with a credit card that doubles the warranty, if you can, and say a prayer. Assuming the company offers a 1-year warranty and your credit card extends that to 2 years, you’re now looking at the cost of the extended warranty in your pocket when a problem occurs 2 or more years later. And at that point? Technology is advancing and coming down in price so quickly, what you would’ve spent on the warranty will probably be enough to replace your system by then. Save your money.

Laptop computers: Here’s the exception to the rule. Buy a service plan with your laptop. Why? Two reasons. First, laptops are more expensive to begin with and the prices aren’t dropping nearly as fast as they are on desktops. Replacement cost will be much more substantial than it would be with comparable desktop. Second, here’s a very pricey item that’s going to be being carried and moved around and opened and closed and who knows what else. The potential for damage is great, and the cost of repair is often daunting. I know that both Dell and Apple (not sure about others) have fuss-free service where they send you a box and you just pop your machine in the mail and it comes back to you a few days later all fixed up. Totally worth it.

Here are a few more general things to consider when looking at a plan:

  • How do repairs work? Does someone come to you, do you have to take your item somewhere? If so, how close by is the repair location? Do you have to mail it in? If so, who pays shipping?
  • How much is peace of mind worth to you? Did you have a similar item before that had multiple problems? Is it worth it to you just to know you’re covered?
  • Is everything covered? Or only certain things?

Bottom line: Most of the time, an extended warranty isn’t going to be your most cost-effective move. In the cases where it does make sense, you still need to go over that contract carefully and be sure that you understand what you’re getting. In the case of a big purchase where you don’t go for the service contract, set aside some earmarked repair money if at all possible. If you don’t end up using it, more power to you.

I hope that helps, Scott and Kristine!


  1. In general I agree that the extended warranties are not worth the money. However, I just got burned, badly. My Honda Odyssey (with great ratings), blew the transmission weeks out of the regular warranty. $3,365. later I was wishing we had forked over for the warranty. We ended up trading her in for a Pilot and yes, I bought the extended bumper to bumper with this one(@1/3 of the tranny repair cost)- just in case.

  2. We are in the same boat as you, pretty Mir. We are big naysayers on the extended warranties. We like to make sure that when we buy big ticket items we use a credit card that extends the warranty.
    These warranties are getting ridiculous too: At a big box store recently (sounds like Came-Apart), I was asked if I wanted one for a $29 home hair cutting kit, as well as for a luggage set. C’mon people!

  3. When reviewing big ticket items, Consumer Reports often tells you if it is worth it to get the extended warranty. We got one on our cheap ‘fridge that we bought when we moved into our first house. I know, I know. We shouldn’t skimp on something like a refridgerator in the first place, but we didn’t have the money to go big. We did manage to scrape up the cash for the warranty and were glad that we did. The compressor started making all kinds of awful noises and while the food was still cold, we couldn’t sleep at night for all the noise. Turns out that the repair on our four-year old would have cost $450 and we only paid $575 for the fridge! In that case, worth it. I’m with you, do your homework before you buy.

  4. We bought a 5-year warranty on a set of leather furniture. The plan had some sort of fancy name, and it claimed that if anything happened and the leather was punctured or torn (even from pet claws, which was our major pre-child worry back then), they would fix it and it would look like new! And there were before and after pictures proving it! So, it tore, we called, they came, they…did stuff. And it did not look like new, and they claimed it was because of the light color of the leather. Ahem. When I called back to complain that the repaired tears had come apart again I was told they couldn’t help me … because I had not called right away. Grrr…I’m getting all pissed off again remembering this.

    Bottom line, I agree!

    bec 😀

  5. Extended warranties on cars aren’t so clear cut. A cheap repair these days is under $500. (Brakes on my old car, a Dodge Grand Caravan, cost me close to $400. Transmissions and the like are in the stratosphere.) You can buy an aftermarket warranty from someone reputable, like Warranty Direct, for quite a bit less than most manufacturer warranties, typically around 1.5 times the cost of a cheap repair. That’s not too bad.

    I don’t buy warranties on most electronics.

    And contra Mir, I also have no real objection to appliance warranties, provided the appliance is an expensive one. For example, no extended warranty on a $400 dishwasher, but definitely yes on a $1,000 washing machine. One alternative to an appliance warranty is a home warranty, typically around $400 per year, but covering a lot of repairs in the home. I’ve had good and bad experiences with the home warranty people, but, if your home is more than 10 years old and you don’t have $5k sitting in the bank for a “bad year” (hot water tank leaks, furnace needs replacing, etc., all in one year), it’s not such a bad idea.

  6. I totally agree on the extended warranty on laptops. I refused to buy mine until we could also afford the extended warranty, as my earlier “extended warranty” was being friends with someone in the tech support for laptops who would let me get service for free. 😉

    Unless you’re buying a Mac, I’ve got a however on the desktop computer. If someone in your family is a geek, buy a generic, cobbled-together computer because then when something breaks they can just buy that one part that is broken and put it back together. most components have better warranties than whole computers.

    One other thought – my FIL worked in furniture sales, and the extended warranty is a great jump in commission – they get x% for regular commission then a higher percent if they sell the extended warranty. That explains the hard sell, but also if you want to reward a really good sales guy, buying the extended warranty is like a tip. Assuming, of course, that it’s a reasonably-priced extended warranty.

  7. Keep in mind whether the item will be out of date (i.e. new HD compatible tvs) or cheaper when or before the warranty expires. We bought a short one for our TV, but declined to renew it. (And husband is a TV engineer; I trust his judgment on this one.)

  8. I once bought I $60ish watch at a department store. The saleslady was all nice until I turned down the extended warranty. “If it breaks YOU’LL be sorry!” she fumed. “No I won’t. I’ll just get another watch.” And you know, it’s still ticking. 🙂

  9. I’m uncharacteristically in disagreement with you about the extended warrentees. We generally do not buy them, except for a) automobiles, b) expensive electronics (think plasma TV) and c) expensive appliances (mid-to-upper range stove, dishwasher, etc.) Ok, I admit, we are probably blowing money on the car warrentees, but as far as I’m concerned, I like that warm protected feeling of not having to worry where a new transmission is going to come from. As for the appliances and the expensive electronics, we get our money out of these warrentees *every* *single* *time*. (which is easy, because certainly for appliances and electronics, you break even the first time a repair is needed.

    Anyway, have I mentioned how much I love your site? And gosh, you’re so pretty, Mir.


  10. Watch for deals though. Since most extended warranty prices are based on the cost of the item, if you get a REALLY good deal on something and the extended warranty covers replacment with an equivilent product it may be worth it.

    When setting up our home gym in the garage we bought a super cheap dvd player for $20. The extended warranty was another $5, and when the temperature changes in our climate inevitably kill that dvd player they will replace it with the cheapest one they have at that time. Based on history, it will be better than the one we have now, and will probably cost more than the $25 we’ve already invested.

  11. I agree, extended warranties are usually a rip-off but my husband likes to buy them anyways. And it did pay off once, our dvd player (like $1000 installed) in our van died after a year and a half, 6 months out of normal warranty time. DH had bought the 4 year plan and we got a brand spanking new portable dvd player without paying anything for the upgrade. I still don’t know how we lucked into that bit of amazing Best Buy customer service because that way beyond what we should have received.

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