Buying a TV? Buying a refrigerator? Get ready for the sales pitch for a warranty.
The salesman will tell you paying an extra $100 or so for an extra warranty will bring peace of mind.
But with so many retailers going out of business in 2017, some shoppers are wondering if these plans are still a smart idea. What happens if your washing machine fails in three years? What happens when you have no idea which company is protecting it, and the store is long gone?
Why you need to think twice
We've all received the pitch in an appliance, electronics or furniture store.
But a report in US News and World Report lists several reasons why you should not buy an extended warranty in most cases.
- The original warranty is sufficient (as in a new car warranty that provides four years bumper-to-bumper, followed by 100,000 mile Powertrain protection).
- Extended warranties are filled with exclusions (where they can claim you dropped your phone or laptop).
- Your gadget will be worthless when it finally breaks.
- Most items don't need repair the first few years, and by the time they do, your 3 year protection plan has expired.
- Your credit card company may offer better protection, such as second year of coverage free.
Consumer Reports Magazine goes even further, saying in most cases, it does not recommend buying an extra warranty.
Store closing caution
But even with the best extended warranties or service plans, what happens when the store that sold you the warranty closes?
Sears, Macy's, JC Penney, Gamestop and Radio Shack are just a few retailers shuttering at least some stores.
Electronics retailer hh gregg is shutting all its 200 stores in 19 states.
If you don't know what company is behind the warranty you bought, and you need it after your store closes, you might say "doesn't that stink?"
That's why it is essential to keep a paper trail of warranties, so you know who to call if your local store closes.
If the whole chain closes (hh gregg, Circuit City, etc) it is essential to have all the information about the warranty company, as there is no store you can call to look up your name.
If you really want one
Finally, if you can't sleep at night without one, most extended warranty prices are negotiable,especially on big ticket items.
And if it's a store you are not sure will be in business in a year, you may want to look to a third part company such as SquareTrade for coverage, so you don't waste your money.
“Don't Waste Your Money” is a registered trademark of Scripps Media, Inc. (“Scripps”).
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