From Consumer Reports Magazine
You finally pick out the big screen tv you've been saving for and just before you hand over the credit card at the store, the salesperson says you ought to purchase the extended warranty to protect your investment.
What's that? You don't want to spend a couple of hundred bucks on a "product service plan" on top of a $1,200 television?
Expect to be pitched at your local big box store.
According to the latest survey from Consumer Reports, 67 percent of in-store shopper said sales staff advised them to buy an extended warranty as an extra bit of insurance in case things go wrong. Perhaps that explains why in-store electronics shoppers were more likely than online shoppers to buy an extended warranty -- 14 percent versus 6 percent.
So, should you buy?
Consumer Reports says NO! The magazine says it's a terrible investment.
"In past surveys, we've found that the vast majority of repairs are made while items are still covered by a factory warranty and that extended warranties typically protect, at relatively high cost, against a very low risk of a catastrophically expensive repair.,"
"And bear in mind that buying items with some credit cards extends warranties at no additional cost," Some retailers, such as Costco, also provide an extra year of protection at no cost.
Service plans often cost more than you'll recover, and many have fine-print terms that can limit or disqualify your claim.
Consumer Reports also says to buy reliable brands and models, and follow the manufacturer's usage and maintenance recommendations.