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Is an extended warranty ever worth it?

If you’ve ever bought a big-ticket household item like a refrigerator, washer and dryer or dishwasher, or any type of electronic, you’ve probably been confronted with an extra question at the check-out counter: “Did you want to purchase the extended warranty for this item?”

At the time an extended warranty might seem like a good idea (“What if my kid dumps my iPhone in the toilet as soon as I get home?”), but you may want to rethink whether the added cost is actually worth it.

Here are a couple reasons it might be worth hanging on to those extra dollars and skipping that additional warranty.

Reason 1: How likely is your item to break, anyway?

Presumably you’ve done some research on this item you’re about to plunk down your heard-earned cash on, which means in all likelihood, it’s probably a pretty reliable product (why else would you buy it, after all?). If you’ve read the reviews and done your homework and you know that this item is likely to stand the test of time (or at least hold out for a couple of years until you’d be ready to get a newer model anyway), then consider whether the original manufacturer’s warranty (ask if there is one!) is enough to satiate you for the time being.

Reason 2: Does your homeowner’s or renter’s insurance cover the same stuff?

Depending on the type of policy you have and what your deductible is, the insurance you have on your house may cover a lot of the same things that the extended warranty would. For example, if your items are ruined in a flood or stolen, in most cases, you should be able to recoup your money directly from your insurance company to recover your damaged or lost goods. Again, if your deductible is quite high, this might not be as advantageous.

Reason 3: What protection does your credit card offer?

Turns out, a lot of credit card companies are offering similar extended warranty benefits as part of their overall packages to customers, so you may be covered simply by purchasing an item with your credit card, as well. For example, certain Citibank cards offer an extended warranty program that adds an extra year to your manufacturer’s warranty of five years or less on items purchased using the card, while certain Chase cards offer similar benefits on eligible warranties of three years or less. Check with your card issuer to see what kind of benefits they offer.

Reason 4: What’s the fine print on the extended warranty?

Remember, not all extended warranty plans are created equal, anyway, and at the end of the day, even if you do end up forking over for the added protection, that’s no guarantee that there aren’t limitations or fine print somewhere that will hold you responsible for added charges on top of what you paid for the warranty for repairs, or that you’ll be at the mercy of repair services hand selected by your warranty policy, which could be seriously lacking in customer service or timeliness. If you do decide to go with the extended warranty, just be sure to read through all the paperwork carefully before signing, and don’t be afraid to ask questions.

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