About Extended Warranties

[Fewer Consumers Buying Extended Warranties for Electronics]
Thank you. Finally consumers are beginning to wake up. An extended warranty, often offered during checkout at most electronics stores, is nothing more than a marketing ploy. While it seems that the company is trying to sell you a service, it's really much less than that.

Let's take Bestbuy for example. If I go to the MP3 Player section of Bestbuy, pick up an iPod Nano, and head to the cash register, I will undoubtedly be offered an extended service warranty. So, for some extra money, they'll guarantee me repair (or replacement) if my iPod breaks. Sounds simple enough. That's because it's too simple...they're trying to get you to pay money for something that you just don't need.

It's quite an easy concept to understand. The retail stores are not trying to sell you a service. They're trying to sell you the sense of safety. They're simply marketing the feeling of security. These giant companies know that if you purchase one of these extended warranty plans, you will feel safer. You will be more confident in your purchase and possibly even motivated to purchase more things. Now, if you have the money and are willing to pay for the sense of security that you get by having a replacement guarantee, by all means go for it. Just remember, you are paying for the feeling; in my opinion it's not a frugal choice.

This quote from Tod Marks, a senior editor at Consumer Reports Magazine sums it all up.

"The odds that you're going to need an extended warranty is extremely rare," Marks said. "The best idea is to take the money you would have spent on a warranty and put it in the bank. In the unlikely event that something goes wrong, then you've got the money to repair it. And if nothing does go wrong, then take your spouse out to dinner."

So, thank you Tod Marks and thank you consumers for finally realizing that extended warranties are nothing more than a rip-off.

Note: Of course if your stuff actually does break, they'll repair it, it's just that most of the time it ends up being a wate of money.