5 Reasons You Don’t Need an Extended Warranty

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Your purchase probably comes with other protections.

Key points

  • Extended warranties don’t cover everything that can go wrong with a purchase, and they’re expensive to boot.
  • Your purchase will likely come with a manufacturer’s warranty, and the retailer you purchased it from may back it as well.
  • The best credit cards also offer purchase protection.

To quote the classic American cartoon character Homer J. Simpson, “Extended warranty?! How can I lose?” Well, with an extended warranty purchase, he’s more likely to lose money and potentially his valuable time as well.

If you’re buying a new appliance or consumer electronics, like a computer or smartphone, they may offer an extended warranty at an additional cost. Extended warranties are available for many items, but these are the most common situations in which you are asked to purchase one. Even shopping on Amazon doesn’t keep you safe from this offer; I’m routinely asked about buying one at checkout on Amazon (and about a variety of items, most recently about a new power adapter I bought for an external hard drive). Extended warranties differ from an existing manufacturer’s warranty (more on those below), by offering to cover your purchase against breakage or other damage for longer. Sounds good right? Well, not necessarily.

1. Extended warranties are expensive

The Warranty Week newsletter noted in 2017 that extended warranties were then a $40 billion per year business. This is a lot of money to spend protecting newly manufactured products, most of which will surely be in good working order for at least the first part of their useful life (and probably for as long as the item is covered by warranty anyway). ). If you’re already looking for a new clothes dryer, do you really want to add an extra charge for a service that may not be necessary? Plus, the cost of just paying for a repair is probably less than what the warranty will end up costing you, according to Consumer Reports.

2. Extended warranty coverage may not apply in all situations

Extended warranties don’t cover everything that could go wrong with your new purchase, and if you’re considering buying one, it’s a good idea to dig into the fine print to see exactly what it will cover. As the Federal Trade Commission noted, extended warranties may also have specific requirements for maintenance or care of the item, and if it breaks, the company may blame you for improper use or maintenance and then deny coverage.

3. Your purchase will likely come with a manufacturer’s warranty

Most appliances and electronics, small and large, automatically come with at least a limited manufacturer’s warranty. It seems like every toaster or vacuum I buy has warranty information on the box or sometimes printed on the back of the owner’s manual. According to Consumer Reports, these warranties generally last around 90 days, and even beyond that period, you might not be out of luck. It’s good customer service to honor an expired warranty, and many companies like the boost this move can give their brand (especially in these days of social media, where you can tweet a manufacturer directly in a public space).

4. Your credit card can protect you

The last reason why you don’t need an extended warranty is related to the payment method you used for the purchase. If you used a credit card for this, you may have what amounts to an additional guarantee through the card issuer. Credit card protection often outperforms a manufacturer’s warranty, so read the fine print for this cardholder benefit, which can cover an item that’s broken, stolen, or otherwise mishap. The best credit cards around come with great benefits you may not be aware of, and it’s worth using them when you can to save money and a headache.

5. The retailer can pick up the item

If all else fails, if it’s been a short time since you bought the item and it breaks, you may even be able to get your money back from the retailer that sold it to you. Return policies vary, but many retailers will stand behind the products they sell. Costco is an example of one of these stand-up retailers.

Still thinking about that extended warranty? In addition to the reasons above why you probably won’t need it, remember that you can save money you would have spent in your emergency fund, in case your new oven or dryer needs repair. If not, using the right credit card to buy a reputable product from a good retailer can go a long way to ensure you don’t need an extended warranty.

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