It’s down to the wire to get those last minute Christmas gifts! If you’ve bought any electronics or big ticket items, I’m sure you were asked if you wanted to buy an extended warranty. So did you?
Dave Ramsey teaches that extended warranties are a waste of money. He believes that having an emergency fund of $1000 takes care of most replacements. That may be the case, but I’m not sure I agree with him.
I believe that extended warranties are important for big ticket items, such as computers, TVs, refrigerators, and basically any other thing that costs more than $500. On more than one occasion, we’ve been saved by having an extended warranty.
Case #1 – We bought a brand new refrigerator two years ago. Refrigerators can be very expensive to purchase and so can the repairs. The refrigerator came with a 1 year warranty, but we decided to get an extended warranty, especially since we are a military family and we move all of the time. I kid you not, right after the 1 year warranty ended, we noticed that there were cracks in the door frame on the freezer side. We had to get the door replaced. After the manufacturer sent the wrong door three times (seriously, it was three times), we received the right door at no cost. Now I’m noticing that there may be a temperature regulation issue with the refrigerator side. But that’s another post. We still have time on our warranty to see how that works out.
Case #2 – I bought my husband a big screen TV for his birthday about four years ago. We purchased the extended warranty for it. Since purchasing the TV, it has been serviced three times. The color wheel went out the first time. The second time, the TV got shaken up during our PCS move and was making a loud knocking noise. Most recently, the lamp went out. We were concerned, but dug the paperwork out of the attic and discovered that we still had 15 days left on our warranty! The cost of the three repairs well exceeded what we paid for the warranty.
While I believe that extended warranties are important, I also believe that it is very important to look at customer reviews and consumer reports before buying a big ticket item. Sometimes it can save you from buying an expensive piece of junk.
What do you think about extended warranties?