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Should You Buy an Extended Warranty?

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?

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{ 9 comments… add one }
  • Greg Gay April 11, 2012, 10:39 AM

    I have only bought a couple extended warranties and honestly cannot ever remember needing one, so I don’t anymore. If you add up every extended warranty you have ever bought I think you will find you are in the red. I read somewhere over 60% of warranty repairs were less than the price of the extended warranty. That doesn’t include the majority of the merchandise that never even needed repair. Most defective electronics die in the first 6 months. I am in networking and have found this to be true. Thats why I plug in my network equipment as soon as it ships then put it in place (if possible) after a two week to one month burn in. After 6 months the chances of failure level off and begin climbing again near the hardwares end of life. This leveling off period is when retailers warranties kick in and that’s why its such a huge money maker for them. They are playing the odds and they are the house. Set aside the money you want to give the sales guy and that will likely take care of the repair. Keep doing it and you will have quite a kitty, then eventually a cruise to celebrate the resiliency of modern electronics.

  • Brittany December 20, 2010, 3:12 PM

    Extended warranties have saved us more times than I can count! We mainly get them for big ticket items, like out laptops and appliances, and we usually end up needing them!

  • Donna Perugini December 20, 2010, 11:44 AM

    Dave Ramsey has a whole philosophy built around his statement for the $1,000 put aside toward repairs….it’s a lifestyle. Most people will not be able to leave the ‘repairs fund’ alone and use it for whatever seems like a need at the moment.

    I think warranties are great for the big ticket items, but my husband was all about no warranties. A couple of whopping repair bills later, he became a believer.

  • South Loop Social Light December 20, 2010, 1:46 AM

    It definitely depends on the item in question. I think extended warranties can be beneficial for high ticket appliances like washers, dryers, fridge, stove, etc… You’ll get the piece of mind and value if it needs to be used. For electronics I tend to not bother. The technology is always changing and if something went out in 4 – 5 years, yes… it would be an annoyance but you could easily replace it.

    When we moved across the country we took our TV to UPS and paid to have them specially package it. It was worth the $ to have our TV professionally packaged and shipped, and the insurance was very inexpensive. I will never bother with packing my own electronics again.

    • Tonya December 21, 2010, 1:44 AM

      That’s a great idea! I never thought about having UPS packing our TV. I’ll look into that the next time around…our warranty will definitely be done by then! 🙂

  • Tamara Derouen December 19, 2010, 9:35 PM

    OMG! I literally had to beat my husband in the head when we bought our appliances because I made sure that he got the extended warranty on every item purchased, and he felt it was a waste of money! When buying big ticket items, it’s always best to safeguard your investment by getting the extended warranty. If you think about it, it’s literally pennies on the dollar when you start pricing repairs, etc. Needless to say, my washer/dryer/fridge all have extended warranties! 🙂

    • Tonya December 20, 2010, 12:19 AM

      I agree! You have to safeguard your investments. I would hate to use a big chunk of savings to pay for something that I could have bought a warranty for.

  • Mrs. S. December 19, 2010, 8:34 PM

    Yay for warranties. Geeze unexpected costs are the worst.

    • Tonya December 20, 2010, 12:15 AM

      Isn’t that the truth! I hate unexpected expenses. 🙁

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