Friday Encore: Can I interest you in an extended service agreement?

Welcome to the Friday Encore where you'll get to read a past blog posting that I thought you might not want to miss. Okay, call it a repeat if you want. When necessary the post may be updated with new information or data to keep it relevant. The following was originally posted March 3, 2008.

Can I interest you in an extended service agreement?

Whenever I shop at a certain electronics mega store near my home I dread my turn at the register. “Why” you ask. Do I not get fabulous new toys at inhumane prices? Well sure I love that part of it—except the guilty inhumane prices. But it’s the pressure at the end of the sale that I can’t stand. You know the “would you like the extended warranty” question.

Even if I say “no” with confidence they keep pushing the point till I finally lose it and scream “Yes, I’m sure I don’t want the extended warranty on an alarm clock!” And sometimes they continue, “but what if it doesn’t wake you up someday?” Scenarios run through my head of missed busses, unbrewed coffee and mismatched shoes. But then my logical side calming clicks and says “Stop. This clerk is just trying to reach some sales goal. It’s just his job, nothing personal. The alarm clock will be fine.” I smile, shake my head and politely say “No, thank you.” Then I pay and am out the door. Whew!


But I have to wonder if my alarm clock or my electric toothbrush stop working what will an extended warranty do? There isn’t a repair room at the back of the store, is there? No in this day of disposable everything your broken electronics cost much more to fix than replace. So what’s with all these extended warranties anyway? Is it ever a good idea to purchase them?


Repairs might be expensive, but they are also not likely. Most products are built to last for at least three years. Anything that breaks within the first year or less is usually 100% covered for repair or replaced under the manufacturers sales warranty. (And you don’t have to fill out those warranty cards—they are mainly for marketing data collection purposes. Trust me I’m a direct marketing data junkie.) Extended warranties yield 40 to 80 percent profit, according to Consumer Reports. And so we can conclude that purchases extended warranties on most electronic are a waste of money.

Will this void my warranty?
Photo by Josh Bancroft

But there are exceptions. Large, complex items such as Plasma TVs, home fitness machines and computers might need more consideration. Personally, I still think that TVs will break quickly if they plan to break at all. I’ve read that warranties on fitness machines may be worth the cost and repairs may come down the road. I always buy the warranty on my laptops after having a horrid experience with a malfunction machine shortly after purchase (crazy story for another time, I finally had to call the VP of marketing at HP to get it fixed.)

But here’s a tip: Before you say yes to an extended warranty on any product, see whether your credit card provides similar coverage. Such plans, most often found on gold and platinum cards, typically lengthen the original manufacturer’s warranty by up to one year. If you use a MasterCard, look in the fine print for the words “extended warranty.” Visa calls its program Warranty Manager Service.

And another: Conumer Reports often investigates warranties and repair/fail records of products. Before you buy check them out.

And finally for more on warranties check out PC World’s article on the subject. It’s full of good info on warranties of all equipment including public surveys on warranty satisfaction.