3 Steps To Protect Yourself When Making Major Electronics Purchases
Stores like Best Buy like to take advantage of your natural fear that a piece of electronic equipment that you just spent a bunch of money on is going to break. And, let's face it, it might — but that's no reason to rely on an expensive extended warranty from the retailer.
Extended warranties are a huge source of profit for the store — and (according to our sister publication Consumer Reports) a big waste of money for consumers.
When you take out an extended warranty, you're essentially making a sucker's bet. You're gambling on a series of events happening at precisely the right time under precisely the right circumstances. These include:
* That a product will break exactly after the manufacturer's warranty has expired and precisely when the extended warranty is in effect. Sure, it's possible, but unlikely.
* That the cost of the repair will exceed the cost of the warranty. Surveys of Consumer Reports subscribers reveal that the costs are fairly close most of the time.
* That the product is likely to break in the first place. According to our data, most products are quite reliable and have not broken during the first three or four years of ownership.
* That you're going to want to have the product fixed. Perhaps surprisingly, many readers surveyed said they didn't bother seeking repairs because they desired a replacement product that had either new features, more power, greater flexibility, more advanced technology, or improved energy efficiency.
Now that that's out of the way, here are some ways to protect yourself when making a major electronics purchase.
1) Pay with a major credit card that offers purchase protection and extended warranty protection.
You may not like credit cards. In fact, you may hate them. In that case, consider a charge card. For the small annual fee, a charge card will offer you many of the same warranty protections that Best Buy and it's ilk are trying to sell you. If you eventually enter into a dispute with the store, it pays to have someone on your side. Do you think Best Buy is going to argue with itself on your behalf just because you bought a warranty from them?
2) Open the box before you leave the store and inspect the item. If you find old phone books or a severed head instead of your new laptop, it will be easier for everyone if the store knows that there's no possibility that you were the scammer/decapitator. If the item is broken, your warranty might not cover the "accidental" damage. If you don't inspect the item in the store, they will assume that you are the guilty party and no amount of arguing will convince them otherwise.
3) Check to make sure the serial number on the item matches the serial number on your receipt. Sometimes people switch broken items for new ones and return the box. If your receipt doesn't match the serial number of the item, the store will assume that you are the one who switched it and the manufacturer may void your warranty. Again, do this before you leave the store so there can be no question about it.
If you are concerned about not having enough money to fix the item after the manufacturer's warranty is expired — ask the store what they charge for an extended warranty and put that amount of money in your savings account. If the item never breaks, you've still got the money —plus interest. If it does break, you'll have money for repairs.
For more in depth information about how to specifically protect yourself from being sold a "box full of crap," (bathroom tiles instead of a hard drive, a disc that says "redneck shit" instead of the game you wanted, etc. click here.
(Photo:wiretap studios)
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Major problem is some times they pay off and some times they do not. If you have a year warranty I think you should be fine. I only buy the "extended warranty" on Mac's.
My Tv's, phones, cars, ect never get any protection on them. If they are to die, I am covered by the 1 year, and after that the price is so cheap I could probably just buy again.
I would say though, that it can make sense to buy the extended warranty on products you know have some reliability issues. For example, the xbox 360. Mine broke past the 1 year warranty, and it broke not from the red ring of death (which is covered for 3 years) but I got it replaced. I also had a friend that replaced his xbox 3 times, which while his issues were all within warranty, he didn't need to mail it off for weeks at a time.
In any case, it is likely one of the rare cases that an extended warranty makes sense.
I used to buy my electronics only through Costco using my American Express card but since AmEx canceled my account I've stop buying electronics, screw 'em both.
@minsky: except if you buy a large electronic item (like my laptop) and want it to last long... then u'll get a 4 yr warranty with accidental damage (well, I got a good deal that requires laptop+4yr warranty... so why not?)
dont feel like plunking down $500 in 2 years to replace my laptop.... i think i've already got my money's worth in accidental repairs: friend dropped my laptop and cracked the hinge(replaced), water spilled on keyboard and killed the keyboard and dvd drive (both replaced)...
I work at Best Buy in the camera department. People come up to me all the time with broken cameras saying that the company wants over a hundred dollars to fix their camera while our plans are only aroud $40 on average. If they only save up $40 and think they can get their product fixed, they're going to be sorely disapointed.
Funny thing about products least likely to break; our toughest camera which is shockproof, waterproof, freezeproof and crushproof is the one with the highest protection plan attachment.
My bf and I bought a tv on his Amex, and wouldn't ya know it, 2 or 3 months out of the manufacturer warranty, the thing starts having a dark stripe up one side of the screen. Amex doubles the manufacturer's warranty, so we called them up, gave them all the paperwork they wanted and got a tv repair guy to give us a quote on the repair. He quoted us the cost to replace the whole lcd panel, because there would be no other way to fix it. It was about $100 less than the price we paid for the tv new. Amex just said "is it okay if we just credit your card for the original purchase amount?"
So... free tv. woot!
I try to hedge my bets. If the warranty for an additional year costs me 5% or less than the overall product, I don't think it hurts. If it's greater than that, I'd take the chance of buying a new one or parts.
Case in point: I have an hdtv I bought with a $50 year warranty, which is roughly 5% of the overall cost of the TV. I think if after a year something happens, I'm okay with paying 50 versus buying a new tv.
I used to sell Best Buy and Circuit City extended warranties and I have to disagree with what you've said here. You CAN get your money's worth and then some, but you have to know the terms of the warranty AND have the kind of personality to be able to use it. For example, the last time I used one, I got a $400 credit toward a new digital camera off a 3 and a half year old HP.
The secret is to get longer warranties and make sure they cover performance, not just breakage. Having an item break might be rare, but performance degradation is practically certain.
@minsky: That doesn't apply to video game consoles it seems.
and working with Whirlpool customer service, it seemed stuff broke much more often outside the warranty than inside it, all within months of the 1 year expiration date.
Try having a Best Buy TV salesperson explain the math/logic of buying a warranty that costs more than 25% of the TV set value.
Or you could add an electronics rider to your homeowners/renter's insurance policy.
Mine cost me $1 per $100 of insurance (so for a typical laptop, anywhere from $10 to $25) per year with a $100 deductible. That way, I'm saving the $200-450 for the warranty by spending $20/year for the insurance. and if it doesn't break, The worst case scenario is I spent $80 on insurance for nothing, If it does break, Even after four years plus the $100 deductible I'm still better off.
As a retailer, I find that manufacturer warranties are usually worthwhile, when dealing with computers anyways. Dell's warranties have a very nice accidental damage tack on that might be expensive but having a full 4 years of accidental damage is very useful for some people I know.
With Laptops, the two things that I've seen fail the most are the logic board and the LCD, both of which are upwards of 200 dollars out of warranties repairs.
@junip: Wow, no hassle, no fighting? Just ok, this all checks out, here is your money?
I am amazed!
Maybe I need to check this out......
Aikoto, was most salesman dont consider when selling warranties is the value of most TV sets after a year +. They aren't like cars... a TV set I pay 1,500 for now will only be worth a few hundred dollars in about a year. Salesman trump up how worried we should be about it breaking down, but really, in the period where it would break down the TV simply wouldnt be worth all that much. Its not like we have a 2008 Mercedes with an engine that died. It's an already semi-outdated used item, and if the really really off chance that it breaks, people should take that risk and by a new one, not waste the usually ridiculously overpriced warranties that are sold up front.
The only thing I would say extended warranties are good for are video game consoles. The PS1, PS2, and XBox 360 have all had issues that if it wasn't for extended warranties, many people would have been screwed, or be without their consoles for a significant period of time, or pay a repair fee and get reimbursed after warranty extension/results of a class-action suit.
It took a lawsuit against Sony to get free fixing of PS2 systems with DRE's (disk read errors) while the 360 has had it's warranty extended twice by Microsoft to avoid a lawsuit, although there may still be one coming.
The only time I buy extended warranties are for laptops. One repair alone when you factor in labor pays for the warranty.
One thing I am debating is buying AppleCare for my iPhone 3G. I have to July to decide, but I have had absolutely no problems with my phone and there are no moving parts that could wear out in an iPhone (no HD, no fans, etc.), assuming no accidental damage of course.
It should be noted that there are exceptions to this that need to be discussed. The first one that someone already mentioned is accidental warranties, no manufacture is going to cover the product if you physically break it. If you're prone to break stuff and can get a reasonable price on an accidental warranty usually that is the best if not the only course of action if you don't feel like tossing the product and buying a new one.
The other factor to consider is that a lot of retailers will offer in home service with their warranties (mainly tvs) which as of yet is not offered by any other form of coverage. At minimum you'll have to load the TV into your car and drive it to your local repair shop where you may pay the same price that you would have paid to have it serviced in your home through the retailer. Consumer reports fails to include any kind of shipping or transportation costs when they concluded that the repair cost is usually right around the warranty cost. Depending on where it's going and how big the product is these costs can be a big part of the repair which is easily avoided when the repair comes to you.
@secretoftheeast: Exactly. My boyfriend bought the extended warranty for his PS3 and had to use it. It was only $30 from Target. Very little in comparison to the cost of the console.
He bought an extended warranty for his TV and had to use it after a bad storm. I just bought a new TV and got the extended warranty for it. It took me too long to save for a new TV not to spend the tiny bit on the warranty in case something happens. Fortunately, it also cover damage from electrical storms.
I don't typically buy the extended warranties, but the few times I have, it has worked out for me or I am ok with the decision:
1. Bought one for like $15 for some computer speakers at Best Buy, they told me if anything didn't sound right up until that time, I could return it no questions asked for a refund (or store credit or something). 2 months before the extended warranty, took them back in, and got some new ones. Super easy, however I probably won't purchase one of these again.
2. Bought one on my 50" DLP tv for 4 years. I figure the bulb would typically go out after 3-4 years, and the warranty was cheaper than the cost of getting the bulb replaced. It hasn't been 4 years yet, and the bulb hasn't gone out, but if it does, it's saving me money (worth it for ease of dealing with it).
3. Got a 3 or 4 year warranty with my laptop from Dell last year. The laptop came out to be cheaper with the warranty than without it (I didn't want to buy the warranty, but I priced for the same specs without it and it cost more). So I took it. Still got time on it and I'm pretty confident something will break (the hard drive if nothing else).
If my Xbox 360 goes out sometime soon, I'll probably purchase a new one (out of warranty and all that), but will get the extended warranty (or buy with an amex), just for ease of not having to deal with Microsoft.
But in general, getting those extended warranties is pretty unnecessary.
@cynical_bastard: we did have to get the original receipt, manufacturer's warranty, and pay for the repair quote up front, but they refunded us the cost to get the quote too. Just have to jump through a few hoops, but it was pretty smooth. I mean.. we're still using the tv. the dark stripe fades after the tv warms up for a while (30 mins-1 hr), so if you're not super picky about the picture you barely notice it. (:
@chrisgeleven: I got applecare for my boyfriend's 2g iphone when i got it for him as a gift. He's out of the one year coverage now, and just recently had to get his phone replaced due to an error that kept popping up (that could have arguably been caused by him). Since he had applecare, it was swapped out no problem.
I guess it just depends on how often you plan to replace your phone. If you're just going to buy the new iphone when the next one comes out, you probably don't need the applecare.
And if you drop your phone and smash the screen, applecare won't help you.
Sometimes warranties are good. Say you get a 3 year warranty on your laptop .Dell and say your mainboard breaks on the laptop if your laptop isnt made andymore then dell will give you the next one up that is about the same to yours.
Example my inspiron 1520 would be replaced with an xps 1530
@aikoto: I totally wouldn't trust them to manage it. Years and years ago my mom bought me a computer at Future Shop (which had just been bought out by Best Buy). My sisters used the computer and got some nasty viruses on it and the secondary optical drive never worked properly. My mom takes it into the shop to be repaired under their warranty, less than 2 months after purchase and definitely covered. they give a few days' estimate (please bear in mind we lived a 40-minute drive from the location) and say to come back on that day and it will be done. My mom says if it's not, we have a family member who does computer sciences and offered to fix it.
Well, we come back and it's not done. We ask to just have it back ourselves and they say they can't. In fact, they can't even find the tower anywhere.
All in all it took us more than 3 weeks after the second trip there to get it back.
then when the monitor blew out (yes, actually audibly went PFFOOM and died) we took it in to deal with a manufacturer warranty. They didn't even offer us and wouldn't give us a loaner monitor even though we were entitled to one under the warranty and service terms my mom signed when buying the damn thing. Rather than that 17" glorious flat-glass CRT monitor (what, it was 2001, that was nice) I had an 11" little box of a monitor that wouldn't boot in XP outside of safe mode because of the resolution being so small.
So if they can't even abide by honoring their basic warranty service, why trust them to judge and cover performance issues on a warranty that costs $$$?
My thought is, extended warranties are like insurance. You hope you don't need to use them but if you do, you are glad you have it. I'm a bit surprised the post didn't say anything about cost of item vs. cost and time of warranty. If the warranty for a large, expensive item is long and is minimal compared to the cost of the item or one repair, then the warranty makes sense. I bought one for my new TV. It covers everything for 4 years and they will send someone to the home to repair it. Very nice for a large TV.
I have refused some warranties because the cost of them was too high compared to the cost of the item and how much they extended the warranty. Someone before mentioned 5% or less per extra year. That might be a good number. I know my TV warranty was about 10% of the total TV purchase for an extra three years. I don't consider that expensive when I know people who have used it.
I too did sell these "extra warrenties." They are great if you buy a big ticket item like TVs, Washer and Drivers, and what not. Why chance it? Why spend the money on the perfect TV, to have it break a couple years after you buy it.
But you really need to read the fine print and understand everything, let the warranty work for you instead of it working you.
I had a LCD tv break 2 months out of warranty. Luckily my Credit Card doubled the MFG warranty and got it all fixed.
I utilize green umbrella for my extended warranties on household electronics. green umbrella dot com. It's 8.95/month on my cc (not contract term), and I have added a new tv to my coverage and no increase in price. I can drop coverage whenever I like.
Honestly, I'm glad I bought the protection plan from Best Buy. I bought a Creative Nomad mp3 player and after almost a year, the headphone jack stopped working. I took it to Best Buy, and they happily replaced it. Since the model I had they no longer stocked, I was upgraded to a 40GB mp3 player from the 20GB I had that had broken, no extra charge, and they extended my plan an extra year.
WORTH IT.
I just bought a TV from a great store called Visions Electronics. I did go for the extended warranty, because it's a little different than most.
If you don't end up using the warranty (ie your TV doesn't break) then you get the cost of the warranty back as in-store credit. As long as I'm going to buy something there again (which I will), it's a win-win.
The fact that we have to have things like this make me sad. What ever happened to common decency. Let the system fail, it's horribly broken and time to build from the ashes.
I paid $100 for the extended warranty on my washing machine($500 Frigidaire). I've used the warranty 10 times, so I'm thinking I'm ahead on this one. When the sales woman offered me the warranty, she said to get it on the washer, but not the dryer. 6 years later, no repairs on the dryer, lots on washer.
I am a very heavy user, so I expected more wear and tear than most.
I think I owe that woman a thank you note.
Speaking as someone who had to jump through hoops last year and finally found someone who through a friend of a friend was able to get our 18 month old Toshiba 42hp66 plasma screen fixed I say BS to anyone who says dont get extended warranties.
Talk to anyone who services Flat Screens and they will tell you that the failure rate is around 30% within the first 3 years. Since most manufs only cover them for 1 year then your screwed. In our case the Toshiba we have is made using LG guts common in MANY large name brands like Zenith Magnavox Toshiba Polaroid ETC. This particular failure involves 3 boards in the tv set (out of 5) and is over $500 just for the parts (thats what Normans Electronics told me). Some of those manufs will extend the warranty and cover you so its worth fighting them over.
Oh yeah and BTW this particular board set fails so frequently its is now sold as a set of 3 boards by some major parts depots. [richtechparts.com]
In the end only because we knew someone did we get it fixed. Oh and as for those credit card extended warranties, read the fine print on those when you're ready for a laugh.
@rattis: Metaphor for our economy?
The extended warranties are optional since most everything comes with a manufacturer's warranty to begin with. Beyond that, how long do you expect a company to take care of you just because you bought something from them?
Common decency isn't as common as the name implies. It hardly ever was, even back in the day.
@aerick79: But you're simply undergoing a real loss now instead of a possible loss later. That's losing the chance right up front. I'm not saying that there's never any benefit from extended warranties (back in the vcr days, I used mine heavily and was very particular about them, and I definitely got my money's worth from the warranties), but that most of the time you're losing money by purchasing them.
Really, it'd probably make more sense to buy earthquake and flood insurance, and how many people here (save the Californians) have that?
@somuch: @somuch: Yep - buy 'em on major appliances. We bought 5 year coverage on our Fisher Paykel washer and dryer. After we got to know the repairman pretty well over the course of 18 months, we ended up having the dryer replaced under the lemon clause in the warranty. We got an upgraded model because the original was discontinued and they replaced based on original price, not comparable specs. Yay, new dryer!
@jscott73: Odd that amex would cancel the costco branded card. Isn't the amex branded card your membership card and has a yearly fee equal to the price of the costco membership?
@Ratty: Warranties don't cover getting your system infected with a virus. If they did at best all they are going to do is format the whole thing and restore it to factory.
Plus what do you mean did not work properly? If you had major software issues that easily could mess with reading a cd.
At best you had a claim for a drive replacement. If you took it to them asking them to fix your software problems, they probably lost it because they didn't know what to do with it. They probably just sent it out for warranty work, even knowing it would just be sent back with the software unchanged.
The Extended warranty I feel is only worth it on a laptop. Just don't buy a warranty that lasts longer than you're willing to use the system.
Most extended warranties on Laptops cost less than a replacement LCD or motherboard. The parts alone can be $300+ Depending on make and model. I got a quote on a Toshiba motherboard that was $600 and $999 for the LCD. That's not even factoring cost of labor, and alot of shops will break it off in you to work on a laptop.
"If you find old phone books or a severed head instead of your new laptop"
On what day was the severed head story posted?
@Scuba Steve: My $1250 Whirlpool Duet washer needed nearly $1000 in repairs after the warranty had expired. Thankfully, I'd purchased Best Buy's extended warranty ($400 covered both washer and dryer for 5 years), so didn't have to come out of pocket.
I also bought an extended warranty on a vehicle. $1200 for the warranty and it replaced a $2500 transmission and another $1500+ worth of misc. work.
Are extended warranties always good? Nope. But they aren't always bad, either.
One thing that really ticks me off about Best Buy is that they try to pressure people buying Apple products into buying the Best Buy service plan. DON'T! It's completely worthless.
With all Apple products, go directly to Apple for "Apple Care". I wont get into the merits of whether you should or shouldn't get it, but if you do, go directly to Apple. You have a full year to decide if you want it, unlike Best Buy, who pressure people to buy their junk at point-of-sale.
Also, if you have purchased an Apple product from Best Buy and have a problem with it, do not take it back to Best Buy. Again, go directly to Apple during your first year warranty.
The only times I've bought electronics warranties are on portable electronics, and only warranties that also cover accidental damage. Laptops and mp3 players are subject to much more stress and abuse than my desktop computer or TV.
@Red_Eye: I bought my LCD TV through newegg.com and got the extended warranty. It seems like it covers a good deal for a total for four years at a minimal price. It's in home service, too. My boyfriend had TV problems after a storm where lightening struck close by. The warranty says it cover that. I hope I won't need it but with the weather around her, who knows. I've protected it as much as I can but that's still not a guarantee.
@Red-headed bookworm: Plus, I hope to have the TV at least those 4 years, maybe longer, without replacing it.
@jimconsumer: in my experience, extended warranties on laptops always pay for themselves. its worked out for 2 laptops personally, several for friends and many at work. 3 years seems to be the sweet spot for price vs time.
@Charles Lam: I will 2nd Dell's accidental damage protection for laptops.
Consumer reports claims a 43% repair rate on laptops in the first 4 years. If you don't have accidental damage protection there is a good chance the warranty won't cover any damage.
Now I seem to be around a lot of people that abuse their machines, so I may see a higher rate of failures.
Regarding warranties and electronics, if a given electronic item makes it through the manufacturer's warranty period without having problems, chances are that the item will work properly for its intended life cycle.
That's why there's no reason for a manufacturer to offer a standard warranty longer than the 'infant mortality' time span of 90 days, one year, etc. If an electronic item will malfunction, it will do so in the first few months of operation, this is standard industry practice, the manufacturers know their products.
So, extended warranties, like discussed in the main article, are a waste of money.