See why it’s often better to put your cash aside instead of buying an extended warranty.

The cashier has just rung up your purchase and asks, “Would you like to add the extended warranty?” Should you buy it? Consumer Reports, an independent organization that evaluates consumer goods and services says, “In nearly every case, it’s not worth the extra money when buying electronics and appliances.” Let’s look at some of the reasons why.

Most products come with a manufacturer’s warranty

A typical manufacturer’s warranty is good for 90 days. If a product is a lemon, you’ll likely notice problems within the first three months of use.

Extended warranties may mean paying for duplicate coverage

Many credit cards offer warranty coverage for purchases made with the card. Check your card’s terms; if you get automatic warranty coverage don’t pay for it again.

The extended warranty may come with requirements

There’s no standard when it comes to extended warranties and those who issue them can structure them any way they’d like. In some cases, the warranty company may require a service fee and in others there may be a deductible to meet before coverage kicks in. Exclusions may also limit coverage. For example, accidental damage will rarely be covered by an extended warranty. Always read the fine print so you can make a fully informed decision.

Compare the cost of repairs

When buying electronics and appliances, consider the cost of repairs in relation to the cost of the warranty. If the cost of possible repairs is not much more than the cost of an extended warranty it’s low-risk to forego the extra coverage.

Considering that extended warranties for large appliances run about $150, covering all your bases could get pretty pricey. Extra warranty coverage for a refrigerator, range, washer and dryer would cost $600. Many folks find that setting aside the money in an emergency savings account gives them more flexibility, especially if they have some older appliances in the house that are more likely to need repairs than a new item.

 

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