Extended warranties are all the rage when you purchase electronics and many other popular items. But I am here to reiterate the refrain that they aren’t necessary.
Consumer Reports says that electronics seldom fail. In fact, TVs only fail at a three percent rate in the first four years of ownership. Why would anyone buy a warranty when you have a 97 percent that your TV will work for numerous years?
Most people have a strange psychology about what we’ll throw our money at. The Journal of Consumer Research found that people are more likely to buy a warranty on something they enjoy than on something they don’t. So a business owner may not buy a warranty on business equipment, but he or she will do so on a big-screen TV!
The reality is that extended warranties have massive costs and aren’t a good investment. For example, The New York Times found a popular Nikon camera where the warranty was 27 percent of the purchase price! For laptops, a warranty can be up a third of the price!
So before you go ahead and buy that extended warranty, I want you to do these two things:
- Look at Consumer Reports’ record of reliability and buy brands/models that are historically most reliable.
- Make your purchase on a credit card that automatically doubles the manufacturers’ own warranty. You’ll give yourself additional piece of mind without having to spend anything extra. This is a free way to get the job done. And you know I love free!