Are Extended Warranties Worth It?

Just the other day I was out shopping at a big box retailer for particular product and was asked if I wanted to purchase an extended warranty.

I politely declined, but as I waited in line, I watched the clerk sell extended warranties that I know the people ahead of me did not need.

This got me thinking… are extended warranties worth it?

Well, according to Consumer Reports, retailers keep 50% or more of what they charge for these contracts.

In some cases they make more on the warranty than the product. Perhaps that is why the sales clerks pushes it, even faulting the product in order to sell the coverage.

Here are 4 reasons you do not need to waste your money on extended warranties:

#1: Repairs may already be covered by the manufacturers warranty.

#2: Products rarely break within the service plan window. The retailer is betting that the product is not going to break during that time, so it’s just like betting against the house. And you know who always wins, right? The house.

#3: Your credit card might have you covered. Many credit cards will extend the manufacturer’s warranty up to a year for free.

#4: Repairs are not that costly. Consumer Reports latest survey found a median difference of just $16 between what it will cost to fix a problem, versus what you paid for the extended warranty.

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