Personal Finance

Why Extended Warranties are a Waste of Money

Ask 10 different people what they think about buying an extended warranty and you’ll probably get 10 different answers. In my opinion, they are a waste of money. I have NOT had a good experience with them and nine times out 10, would say NO if offered to purchase one. I don’t like to say never because you never know.

These days you can purchase an extended warranty on just about anything. Even Walmart is asking if you want to buy one when you buy a Blu-ray or video game. I always say “No thank you”.

A few years back I purchased a computer at a big box store. It’s the salesperson’s job to upsell you the warranty package when you make your purchase. At the time, it sounded like a good thing. I realized months into it that I was wrong and wished that I could go back and change my answer to a big fat NO. However, I was locked in for THREE YEARS on the dang thing and there was nothing I could do. I marked on my calendar the day it ended so that I could make sure they can stop charging me for it.

I keep kicking myself for buying. I guess the moral here is to think before you opt into an extended warranty. I learned my lesson from my mistake and wished I had given careful consideration. I will be a much smarter shopper now when I purchase a new laptop and politely decline the upselling offers. In my case, there was no need for it and I wasted so much money on it. I shudder to even think about it.

Why Extended Warranties are a Waste of Money

  © Aquir / Dollar Photo Club

So why, in some cases, is an extended warranty unneccessary or even a complete waste of money? Here are seven reasons to say no.

1. Most items you purchase are already covered by a manufacturer’s warranty. If something happens to the product, you may already be covered and won’t have to shell out the extra cash. Take a computer for instance. Three years is a LONG time for a laptop. I’m surprised mine made it this long. The manufacturer’s warranty on my laptop covers one year parts and labour if something happens. When you purchase an extended warranty, be careful it doesn’t end up costing you MORE than what you paid for the item itself.

2. Read the fine print on an extended warranty. If you considering purchasing one, pay attention to the contract you are signing. What is covered and what isn’t? How much is it going to cost you in the long run? $15 a month doesn’t sound like much, but multiple it over three years and then see where you’re at!

3. Product is low value or can be replaced easily if need be. Take the Blu-rays at Walmart. You can buy them from anywhere from $4 to $30. If for some reason it broke, you could easily replace it. Save your money and spend that $1 elsewhere.

4. The extended warranty is too expensive. I wouldn’t recommend going into debt purchasing an extended warranty. Not only will you have to pay for the warranty itself, but interest on it. If you finance it on your credit card and don’t pay it off within 30 days, you will pay interest. That warranty will cost you even more money compounded over the years! Also, the warranty can end up costing you more than the item is worth. Always figure out the total cost before you sign up.

5. You’ll still have to pay for the warranty even if you aren’t using the item. Will you use the item for the term of the warranty? If so, maybe consider it. If it’s item that depreciates quickly in value, it may be best to just say no. Take my computer for instance. I would have rather saved all those monthly payments and purchased a new computer than suffer with the old beast because of this extended warranty!

6. Your credit card may also offer a warranty. For example, some cards will extend the manufacturer’s warranty for a period of time if you purchase the item with your credit card. Check your cardholder agreement to see what yours offers. Mine offers up to one year extension on the manufacturer’s warranty.

7. The cost to repair or replace the item is low. I’m going to take my chances next time around. The item may never break or need any replacement parts. If it does, I’ll deal with it when the time comes. Better yet, I’ll invest the money I was wasting on paying for an extended warranty and line my pockets instead of the other way around!

I was curious what some of my blogging friends thought about extended warranties so I did a little crowdsourcing. The responses was mixed!

Usually I never get the extended warranty {DVD player, appliances, even you can on toys now!}. That being said, I only do for my phone and computer/laptop since they are apple products and getting anything fixed seems so expensive that it’s worth it. My Organized Chaos

Depends on the warranty and the product – for most I turn them down, but for others, I’ll take them. Example? Toys R Us once gave me one that included a full replacement of something I had bought my daughter for $2.00 extra. Knowing my kid? I accepted it. Replacement was ordered 2 months later with no issues. For products that I know are going to get knocked around a bit, I generally take them if they’re not too much extra, for others (say…a mattress?) where the product is generally fine, I skip them. Six Dollar Family

We always get extended warranties and its paid off on a few occasions. From a duo DVD player for the kids to two iPods we purchased at Best Buy we’ve been able to get replaced at no additional cost. I’m sure I’ve taken back other things but can’t think of right now. Candypolooza

I have one on my car, and on my TV, and on my furniture. I swear by it, although I’ve never needed to use it (knock on wood). So, if you do the math, they haven’t been worth it for me. However, I’d still get them if I had to do it all over again, because I’m a firm believer in “just in case” scenarios. Or, I’m just a worry wart. Keenly Kristin

We sometimes get them on power tools we buy. That way they are covered for a while anyway. I did opt for a 2 yr on this laptop, but only because after I bought the first one, my stupid cat knocked it off the couch and it was gone. Oh, and we always pay the extra money for the lifetime warranty when we buy car parts. That way if they break, we get them replaced, no questions. The More the Merrier 

I only get them for cars and computers. For other things, I’ve found that companies often don’t honor them (they use tiny stains/scratches on the item to void the warranty). Plus, I’m terribly disorganized and it’s not worth it for me to keep all of the receipts/paperwork for smaller items. Someday I’ll Learn

I think they’re a waste of money, most of the time. I get offered a warranty on the games I buy for me and my boys all the time. If they’re my games, they won’t get scratched. If they’re the boys, they might, but they’re also just as likely to get lost and a warranty does me no good then. And 90% of the time, I can use car polish to fix a scratched disk anyways. Anything with a free guarantee, though, I totally use. (ie. the guarantee on kid’s clothing from Walmart). Mommy Kat and Kids

I get warranties on larger ticket items like used cars. I always weigh the cost of the warranty over the term. If the cost is less than a reasonable assumption of repair/replacement than I go for it. I never buy warranties for smaller ticket items. That said my husband did get one when we purchased an iPad a few years ago and my daughter dropped it in water. It was fully replaced so it was worth the cost. Thinking Outside the Sandbox

I get them on appliances, cameras, electronics, etc. anything over $100. I use square trade through Amazon or Walmart and have never had a problem. Usually I have my Amazon credit within 48 hours of filing a claim. Just 2 Sisters

In my personal experience, it is a waste of money. I purchased one for my car years ago and they refused to honor it. My only recourse was to hire an attorney and that would have cost me more than the repairs. About A Mom

Generally the only time I buy extended warranties is on a purchase like a car that I intend to keep for longer than the original warranty period. For most other items, in my experience, the amount paid isn’t worth the benefit. The items outlast even the extended warranty period, so the company has made money and you haven’t benefited. I never buy warranties for small ticket items; It costs me less money to just replace the item if it actually dies. Plus, some credit card companies actually offer extended purchase protection by making the purchase on their card, so I’m protected without paying for additional insurance or warranty. Merlot Mommy

Nope. I never buy an extended warranty. Doesn’t matter what the product is, typically when you need something repaired, it’s not covered under an extended warranty. My husband, on the other hand, buys the extended warranty for everything! Nap Time is My Time

For the most part it’s waste of money. By the time the regular warranty runs out, I’m ready to upgrade. And most of the time, the extended warranty doesn’t cover what ends up needing to be fixed. We bought an extended warranty for my laptop years ago. All the parts that we have had to fix/replace…not covered in the extended warranty. It was a total waste. But for something like a Car or House; something we aren’t planning on upgrading in a few years; then it would be worth it. We purchased extended warranty for those because the cost of the warranty is the same as ONE repair on our car or house should anything need to be fixed. Our house warranty has paid for itself over and over again this last year; and it’s only a 8 year old home. Jade Louise Designs

I have purchased extended warranties several times in the past and I can only think of one time that I used it. Most of the time, I either forget I have it or don’t have a need for a warranty (ie, the product didn’t have any problems beyond normal wear). I usually turn them down now. Better in Bulk

It all depends on the cost of the warranty. I bought a vacuum and the warranty was $7, so I got that one. I’m infamous for blowing up vacuums. I also get them on furniture and most electronics. Home Grown Families

I’ve seen some come up to 25-30% of the purchase price. Extended warranties are a great money maker for companies. They do play on your emotions with this product, which usually is a bad deal for you. Dad’s Green Life

With the way products are constantly being upgraded. and improved, to me extended warranties are pointless. By the time you even start to use the warranty, the product will be out of date. The only thing I may purchase the warranty for would be a really large purchase like a car. Sarah’s Blog of Fun

Hindsight is always 20/20. If only I had known then, what I knew now.

Do you think extended warranties are a good investment or a waste of money? I’d love to hear your thoughts!

Stacie Vaughan

Stacie is the mom of two girls and lives in Ontario, Canada. She enjoys cooking/baking, photography, reading, DIY and is fueled by lots of coffee!

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