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Product warranties can be a terrific thing. They help protect your investment in an item by providing you with assurance that what you’ve bought is going to last for a certain period of time. However, most products that come with a warranty also come with the option to pay more money to get that warranty extended. It is often not worth it to fork over the funds for that extra protection. The only people those warranties benefit are the people lining their pockets with profits from you buying the warranty. Think of extended warranties as a type of insurance; you should always look carefully at the pros and cons of insurance before investing in it!

Source: Car-Inspector.com

Here is a look at five common items for which it isn’t worth it to buy the extended warranty:

1. Appliances. Did you know that retailers actually make more money percentagewise on your purchase of the warranty than on your purchase of the item itself? Consumer Reports shares the secret that appliance retailers may make a profit of up to 50% on a warranty, whereas they only make about 10% on your appliance purchase. They also warn that the extended warranty for appliances is almost never worth it despite the fact that about 20% of consumers pay to get it.

Why isn’t it worth it? Appliances rarely break down within the time period covered by the extended warranty, and in the rare case that they do break, the average cost of the repair is comparable to the cost you might have paid for the warranty. You’re paying money for peace of mind, but not actually saving any money even if you do have to use the warranty. Moreover, extended warranties on appliances typically don’t cover problems related to wear and tear, so your appliance breakdown may not even be covered at all.

2. CRT Televisions. There are very few people even in the market for these television sets today, but if you happen to be one of them, then don’t bother getting the extended warranty. A warranty for this type of TV often costs a lot in comparison to the price of the TV itself, and yet these TVs actually are less likely to break down than other more modern sets. This makes the extended warranty not only pointless — but pricey!

3. New Cars. It is debatable as to whether or not an extended warranty is worth the cost for a used vehicle, since such vehicles are likely to require unanticipated repairs. However, the situation is a lot clearer when it comes to new cars – the extended warranty is almost never worth it. Edmunds explains that this is especially true if you are not planning to keep the car for long after the manufacturer’s normal warranty ends. The deal with extended warranties for automobiles is that they come with a lot of fine print, potentially high deductibles, and may not be necessary since the car is unlikely to need major repairs during the covered period.

4. Computers, especially low-end computers. One of the main things that you want to look at when considering whether or not you’re going to get your money’s worth from an extended warranty plan is the cost of the plan compared to the cost of repairing or replacing the item should it break. If you’re getting a low-end computer that doesn’t cost a lot to begin with, then you will most likely find that the replacement cost is equal to or lower than the cost of the warranty itself.

5. Smartphones. Extended warranties on smartphones are a bad choice for the same reason that it’s a bad idea to get an extended warranty on a computer. Additionally, most people choose to replace their phones rather quickly, because the technology on these devices changes so often. If you are not going to want the phone a year from now, anyway, then why would you pay to get an extended warranty for it?

So what should you do to protect your product investment if you aren’t going to pay for an extended warranty? PC World published a great tip back in 2005 that still applies today:

“Financial planners recommend making your purchase using a credit card that extends the manufacturer’s warranty, and then putting the cost of the extended warranty into a repair or replacement fund. Often, by the time you need that money, you’ll probably have saved enough to replace the nonworking tech product.”

Do you have a story about extended warranties to share? The comments section below is waiting for your tale!