Here’s some good news from the Seattle Times, fewer consumers are buying extended warranties. Even though Americans will spend $6 billion on extended warranties for electronics, the popularity of said warranties is waning.
Best Buy recently disclosed in its annual report that extended warranty sales as a percentage of revenue fell 12 percent during the past fiscal year. At Circuit City, warranty sales last year fell 8 percent as a percentage of revenue.
The declines are welcomed by consumer advocates, who have long argued that extended warranty contracts, also known as “service contracts” or “protection plans,” are too pricey and often unnecessary.
“There appears to be a growing awareness that these are a sucker’s bet,” said Tod Marks, a senior editor at Consumer Reports magazine.
Hooray! The word is getting out. Don’t fall for the warranty sales pitch.
“The odds that you’re going to need an extended warranty is extremely rare,” Marks said.”The best idea is to take the money you would have spent on a warranty and put it in the bank.”
“In the unlikely event that something goes wrong, then you’ve got the money to repair it. And if nothing does go wrong, then take your spouse out to dinner.”
Consumerist recommends buying expensive electronics with a credit card that offers free extended warranty protection.