What to do about extended warranties

November 19, 2008 5:37:01 PM PST
If you're watching every dollar, you certainly don't want to waste money on things you don't need. So what about those extended warranties many electronics come with?

Will paying more now save you in the long run?

It turns out being too careful can cost you. Extended warranties entice the cautious consumer but in the long run research shows they are not worth the money.

A laptop Samantha Manning bought for her daughter to take away to college and she purchased the extra $200 extended warranty which covered the computer for two years.

CompUSA went bankrupt, but the company says all extended warranties were honored after the majority of stores closed.

But that's not the case with all retailers. Going bankrupt could negate any deal for service you paid up front and also void any gift cards. With many stores struggling to stay open, it's not smart to hedge your hard earned money against their on economic survival.

Always check the fine print. Sometimes the manufacturer or a third party like a bank guarantees a warranty beyond what the store offers.

Also check with your credit card company. If you charged it some cards automatically extend the existing warranty on whatever you purchase, without you have to buy extra. But if you do want to buy piece of mind, shop and compare first.

Consumer Reports warns extended warranties are a cash cow for retailers so expect a hard sell at the register. Just don't be tempted because studies show the cost of any repair within the warranty period is usually far less than what the extended warranty cost in the first place.


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