Extended warranties, also known as service plans, are often pushed by retailers, but they’re rarely worth the cost. Here’s what you need to know:

Why Skip an Extended Warranty?

Repairs May Be Covered by the Manufacturer’s Warranty
- Most products come with a built-in warranty lasting at least 90 days.
- Buying an extended warranty may duplicate coverage you already have.
- Paying for extra coverage sends a message to manufacturers to shorten their standard warranties.

Repairs Are Usually Affordable
- The cost of most repairs isn’t much more than the price of a service plan.
- Example: In a survey, the median cost difference between repairs and a service plan was just $26.

Out-of-Warranty Help Is Often Available
- Manufacturers frequently replace or repair items with known issues, even after the warranty expires.
- Contact the manufacturer directly and escalate if needed.

Credit Card Perks
- Many credit cards extend manufacturer warranties for free on purchases made entirely with the card.
- Coverage can last an extra year or more.

Additional Reasons to Avoid Service Plans

• Unwritten Warranty Protections
• State laws often enforce an “implied warranty of merchantability,” ensuring that products meet reasonable standards of quality and usability.

• In 11 states and Washington, D.C., even “as-is” sales can’t waive these protections.

• Fine-Print Exceptions

• Service plans often have exclusions that can lead to denied claims.

• Surveys found dissatisfaction with service plans: 19% were unhappy with repairs, and 23% said it took multiple attempts to fix issues.

• Automotive Warranties Are Particularly Risky

• Third-party automotive service plans often deny claims, stating the issue isn’t covered.

• Too Expensive to Protect Everything

• Covering all your major purchases with service plans isn’t cost-effective.
• While an occasional plan may save you money, skipping them usually leaves you ahead.

What to Do Instead

Self-Insure
- Save the money you’d spend on service plans in a dedicated repair/replacement fund.
- Use it if repairs are needed and explore other coverage options first (manufacturer warranty, credit card benefits).

Buy Reliable Products
- Invest in brands and models with strong reliability records.
- Check consumer reviews and ratings before purchasing.

Read Manufacturer Warranties
- Federal law requires sellers to provide warranty details before purchase.
- If you’re unsatisfied with the coverage, choose a different product or brand.

Summing it up

Skip the extended warranty and instead rely on the manufacturer’s warranty, credit card benefits, and a personal savings plan for repairs. You’ll likely save money while still protecting your purchases.

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