Extended Warranty Buyers’ Guide 

Upon reaching the checkout counter during the peak of the holiday shopping rush, many consumers are faced with the familiar question of whether or not they would like to purchase an extended warranty on the product they are buying. It is a question worth pondering, and some shoppers do not know if a warranty is a good value or just a waste of money. Before purchasing a service plan or warranty, various consumer advocacy groups advise consumers take stock of certain factors. 

How did you pay? How shoppers pay for items can affect their warranty options. For example, some credit card companies extend manufacturers’ warranties on certain products or may already include service plans among their card benefits. Before coughing up more dough, consumers should check the fine print of their card policies to see if they’re already covered for warranties and other things, like travel insurance and product protection.

Which parts and repairs are covered? Warranties may be very specific in the problems they address, and consumers may still have out-of-pocket expenses even after purchasing warranties. For example, the U.S. Federal Trade Commission says that consumers may incur shipping costs to send items back to factory or service centers. Some warranties require shoppers pay for labor charges, while others state that items must be packaged in their original boxes. Certain conditions deemed “normal” wear and tear may be excluded from coverage.

What does the store get? Consumer Reports says that retailers often push hard to get shoppers to buy service plans because they’re a source of additional income for them. On average, stores keep as much as 50 percent or more of what they charge for warranties. That can be even more than they make selling the product itself. Shoppers would be wise to keep in mind that, with regard to warranties, retailers may be looking out for their own best interests rather than the consumers’.

Check your insurance policyIf a product is damaged or stolen during a fire or another major home or automobile event, an existing insurance policy may already cover the items.

When a warranty can be a good idea It’s often wise to purchase extended warranties when buying previously owned or refurbished products, such as used cars or repaired electronics.  A warranty on an older home also may be a good bet.

Many consumer products do not need to be covered by extended warranties. Consumers should give such warranties consideration before they begin shopping to avoid making rushed decisions at the checkout counter.