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Should You Buy an Extended Warranty?


Here’s what you need to know!

Is a laptop computer or other electronic device on your Christmas shopping list this year? If so, make sure you’re ready for the question you will surely be asked as you complete the purchase: “Would you like to protect your purchase with an extended warranty?”
You have, no doubt, done a lot of research in anticipation of such an expensive gift. But if you haven’t researched extended warranties, you’re leaving yourself vulnerable to a costly, emotional, last-minute add-on.


In most cases, just say No

According to Consumer Reports, extended warranties for laptop computers are generally not worth buying. In a survey of nearly 37,000 laptop buyers, only 15 percent of those who paid for an extended warranty ever used the coverage. For purchasers of Apple laptops, that number was just 7 percent. Among those who didn’t pay for coverage but ended up needing a repair, the median amount paid for the work was $118, which was just $3 more than the cost of an extended warranty. For Apple buyers, the median cost of the repair was $165, which was less than the cost of an AppleCare plan.

With cell phones, the decision is more difficult. The frequency with which people damage, break, or lose their phones is much higher than with laptop computers. A Consumer Reports survey of over 5,000 cell phone owners found that fully 50 percent experienced at least one “major smartphone fiasco” over the previous two years. Still, deciding whether you should pay for an extended warranty is not easy, especially since multiple protection plans are available from both phone manufacturers and service providers. The best you can do is compare the options and weigh your risks. What’s been your past experience with cell phones? Will your kids use the phone? (If you are buying a phone for a child, consider using a contract that spells out whether they are responsible for repairs or even replacement). 

Built-in Protection

Remember as well that you may already have extended warranty coverage through your credit card, including CCCU Visa cards. Double-check before making your purchase, as it will only be activated if you use that particular card for your purchase. Plus, some credit cards have recently reduced their benefits, so even if you’ve had extended warranty coverage through a credit card in the past, the terms may have changed. If you do have coverage, be sure to read the details of what is and isn’t covered.  

What about other electronics, such as televisions, gaming consoles, or cameras? Consumer Reports says, generally speaking, they are not worth it. 

At the very least, before you buy, research the reliability of the product you’re planning to purchase, know how long the manufacturer’s warranty lasts, and see if you have extended coverage from one of your credit cards. You may decide that buying the extra warranty is well worth your peace of mind. On the other hand, you may agree with Consumer Reports that such an expense would be “money down the drain.” Either way, decide ahead of time what you will do. That will help you avoid feeling pressured to buy.

Matt Bell is the author of four Biblical money management books published by NavPress. He speaks at churches and conferences throughout the country and writes the MattAboutMoney blog.

This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.

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