Straight out of the “Gee, really?” department is the news from Consumer Reports that extended warranties are rarely worth the cost to consumers. I’m sure that most of us have been there. You buy a new gadget and are asked about purchasing an extended warranty. They quite often promise the moon in terms of coverage and warn of horrendous costs if anything brakes. I know I’ve had that line of stuff tried on me numerous times.

The figures are for these unnecessary extended warranties are quite significant. This holiday shopping season is expected to rake in $1.6 Billion only for extended warranties, not for the products themselves. To quote Consumer Reports “And almost all of it will be money down the drain.” The obvious reason that sellers are pushing these on consumers is because they offer a large profit margin. They can keep half of the warranty cost or more.

There are two main reasons why these are bad deals for consumers. The first is that the products in question rarely break within three years, which is the typical extended warranty period. The second reason is that when the products do break, the cost is typically around the cost of the warranty in the first place. In other words, keep your money. Chances are you will not have to spend it on repairs.

The article does mention two exceptions where you may strongly consider an extended warranty. Rear-projection microdisplay TV’s are the first exception, as they have on average needed repairs three times more often. Also mentioned was Apple computers. Apple’s were mentioned because they come with a paltry 90 day phone tech support.

I have not purchased an extended warranty in over ten years, and have not regretted saving my money once.