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When Skipping The Extended Warranty Can Actually Save You Money

If you’ve ever bought appliances, furniture, or electronic goods from a large retailer, then you’ve probably had this happen to you. Once you’ve made a decision about which appliance you’re about to purchase, the salesperson tries to sell you an extended warranty.

Many people don’t realize what an extended warranty is. They just see their new, expensive gadget or appliance breaking and having no recourse to get it fixed or replaced when it breaks down. But, it’s not that simple. There are several situations where an extended warranty doesn’t help you much, and, as a matter of fact, could even cost you unnecessary money.

Here are a few scenarios where it’s better to forego the extra insurance and save your money instead.

The Manufacturer’s Warranty Covers Everything

Many times we panic and purchase the extended warranty without even reading the original manufacturer’s warranty to see what it covers and for how long.

Truthfully, federal laws state that you must have access to the manufacturer’s warranty for any product prior to making the decision to purchase it. This means that you can read it through to see how long it will last and what it will cover in the event of a breakdown or malfunction. If the company will refund you your money, repair, or replace your item, you could probably go without the extended warranty.

Also, keep in mind that while most manufacturer’s warranties last for approximately 90 days, the majority of first-rate manufacturers are likely to replace or repair your device simply because the act of doing so constitutes phenomenal customer service.

Also, research has proven that the vast majority of electronics and appliances that are bound to malfunction don’t break within the window of the extended warranty. Most will malfunction quickly or once they are in the last leg of their lifespans.

A Majority of Likely Repairs Cost Less than the Warranty

Even though appliances, furniture, and electronics do break, the average repairs cost the same or only a bit more than the usual percentage charged for an extended warranty.

When considering the cost of repairs, keep the cost of average extended warranties in mind. For large appliances, they average $126, and for smaller devices, they usually cost somewhere around $21.

If your most-feared issues cost less than either of these figures, it’s not worth getting the warranty extended. After all, repairs are not usually too expensive, so the financial risk of needing a repair that exceeds the cost of the extended warranty is relatively small. It’s better to save your money.

As a matter of fact, one of the most vulnerable products, smartphones, have inexpensive covers and screen protectors that will protect your phone from most mishaps. They’re a reasonable way to purchase affordable protection against drops, and they’re easy to find on reputable sites like

The Product is Made by a Quality Brand

If you’re buying a quality brand, chances are you’re already paying more because it’s less likely to break down. If you decide to buy a cheap knockoff brand of an appliance or electronic device, you may be saving in the short-term but the fear that the product may break down prematurely may encourage you to purchase an extended warranty. The irony is you would not need this warranty if you invested in a better product in the first place.

A good way of looking at it is to compare pricing. If the extended warranty costs more than 20% of the product’s cost and the difference in price for the better brand is less than that, then it will always make more sense to purchase the name brand from a reputable company.

Are you unsure of which brands are the cream of the crop for the device you are buying? Simply research items online and compare their respective reviews. Also, check the specs to see which brands have all the features you need and none of the extras that you don’t want.

You Have Credit Card Coverage

If you have extended warranty coverage as a perk for using your credit card, then all items purchased with that card are covered without an extra fee. If you’re unsure if your credit card provides this service, call your card issuer to find out.

You Shopped at a Store with an Excellent Return Policy

If you plan ahead before shopping for expensive items, you can start by researching the return policies of various stores and national chains. Make it a point to give your business to retail outlets that will take returns on items that are defective.

Skip the Extended Warranty

In conclusion, there really is never a good reason to pay for an extended warranty, but, in these five situations, there is definitely no obvious need for one. So, if you fall into any of these categories, don’t waste your money.

Instead, try your best to resist the temptation when an extended warranty is offered by your salesperson. They are taught to push these policies because extended warranties are a $40 million aspect of the retail business with a profit margin of nearly 50%! As such, salespeople may overestimate how likely it is that your product will break.