When to Purchase an Extended Warranty
by Justin Lukasavige

Perhaps one of the worst deals in retail today is an extended warranty plan. In fact, electronic stores such as Best Buy and Circuit City often make more money on an extended warranty plan, than they do from the actual product.

Some of the things you need to think about when making any purchase, are the cost of the item, how long it will last, and the cost of an extended warranty.

First of all, most stores will stand behind a product you purchase from them. If you purchase a cell phone and it stops working in the first few weeks (and sometimes months), your carrier will often times replace it at no cost. For instance, I had a phone with service through Verizon. Around the 6-month mark, I couldn't hear the person on the other end of the phone at all. I took the phone back to the Verizon store, and they replaced it with a newly refurbished phone at no cost to me.

Most stores realize that they stand to lose not only your business, but also the business of the people you tell about your bad experience.

Secondly, most of the equipment that you buy today, will last quite a long time. It is also a fact that items such as electronics drop in price so rapidly, that you'll pay more for a warranty, than you would have had pay to replace the item. If you notice when a cell phone first debuts for instance, many times within 1 year later, you can buy that some phone for a fraction of the price.

The final thing you have to think about is that if a warranty was a good deal for consumers, meaning we would save money by purchasing one, then the manufacturers would be losing money, which is a business decision they don't ever make on purpose. An extended warranty simply never makes sense.

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