Extended Warranties: Make the List or Break the Bank?
- December 11, 2015
- By: Greenpath Financial Wellness
The holiday shopping season is in full swing! And, likely, if you have gadgets on your gift list, you are going to be asked about purchasing an extended warranty. But does it make sense for your pocketbook? (Recently, the Wall Street Journal talked about the plusses and minus of extended warranties.)
So, when is it a good idea for you to purchase gadget warranty/ insurance? Does this make financial sense?
- If you are prone to drop or damage items, like phones, tablets/laptops, it might be a good idea.
- If you have a track record of leaving your gadget on the bus, or permanently losing your smartphone endlessly.
- Most gadgets come with a built in warranty already, so paying for the extra insurance might not be the best option.
Instead of purchasing the extra insurance on smaller items that you purchase around the holidays, what should you do?
- Take that money that you would have paid and set it aside in a separate savings account. If, by chance, you need to repair a gadget, the money you set aside could cover the price of the actual repair AND be cheaper than the orignal price of the extended warranty.
The numbers are in and the odds are with you!
- 20 percent of people that purchase an iPhone end up cracking the screen within the first year.
- A Consumer Reports survey found that only 15 percent of buyers got a new phone because the old one broke
- The same Consumer Reports survey found that only 2 percent got a new phone, because it was lost or stolen.
Well, then, who might need it an extended warranty?
- The accident-prone
- The loss-prone
- Those who need extra help (online chat support comes with many extended warranties)
- Time-sensitive people (break your phone and need a replacement shipped to you right away)
- Peace of mind to help you sleep: If it worries you endlessly (keeps you awake at night) that you didn’t purchase the extended warranty.
Be a smart, sharp, shopper!
Finally, we always share, when you are out shopping, don’t be forced or rushed into buying anything. Whether it’s a product, signing up for a store credit card to receive a discount, or buying an extended warranty. Do your research ahead of time and be a smart, sharp, shopper!