En español | You complete your purchase of a brand-new laptop and the retailer looks at you quizzically while ringing it up. “Didn't you want the extended warranty on this?"
"No, thanks,” you reply. “The salesperson already asked me about it."
But now you're second-guessing and feel foolish: “OK, I guess I'll take it.” So, the big question remains: Should you pay for that insurance policy, of sorts, in case something goes wrong with your gear down the road?
Save your money, according to editors at the nonprofit Consumer Reports (CR) magazine. Those who buy extended warranties and service contracts for electronics rarely use them for repairs.
This data was collected from a recent CR survey about laptops that many of its members completed. The consumer advocacy organization based in Yonkers, New York, has given similar advice on appliances, desktop computers, tablets and televisions.
What's more, the same laptop survey found that the vast majority of repairs were made while items were still covered under a factory warranty.
Insurance, repair costs similar
Interestingly, the median cost of an extended warranty or service contract is about the same as the median cost of a single repair, says Christopher Raymond, Consumer Reports’ deputy technology editor. However, an extended warranty might make sense for some something small and portable, such as a smartphone.
"The bottom line [is] if you have a habit of dropping your phone, it might make sense to spring for the added protection,” he says. “Otherwise, put the money into your savings account just in case you need it. The stats say you'll probably get to keep it."
Liz Weston, a columnist for popular personal finance site NerdWallet, echoes Raymond's sentiment.
"If you're going to be carrying around something that's fragile, like a smartphone, you might consider an extended warranty as there is a higher chance of something going wrong. But otherwise, they're generally not advisable,” Weston says. “In general, many people don't use the extra warranty and/or they overpay for it."
Even if you have an issue with your gadget, the extended warranty you bought might have fine-print terms that can limit or disqualify your claim. Online sites such as Amazon and big-box stores such as Best Buy earn a “huge profit” from extended warranties, Weston says.
Buyers spend more than $40 billion
As of 2017 in the United States alone, extended warranties are a $40 billion industry, according to the trade publication Warranty Week, based in Forest Hills, New York. That includes appliances, electronics and vehicles. Two-thirds of in-store electronics shoppers and almost three-quarters of appliance purchasers say an associate has pitched an extended warranty to them.
Worldwide, extended warranties are expected to balloon to nearly $170 billion by 2027, up from $120 billion worldwide in 2019, according to an August report from Allied Market Research, an India-based consulting firm with U.S. offices in Portland, Oregon.
"Extended warranties may also not make sense because many of these tech products are made very well, especially if they're going to be carried by a big national chain,” Weston says.
"My advice is to just to buy better stuff,” she says. “Don't be worried about it breaking, do your research with both consumer and professional reviews, and check out websites like [New York-based] buymeonce.com that offer a deep dive on products that are better made.”
Get more without paying more
Technology changes rapidly, so fixing an old smartphone or television might not make sense when newer models offer more advanced features. But here are ways to get a better deal without paying extra:
• Some credit cards, including the AARP Credit Card from Chase that's available to members, extend warranties at no additional cost. If you're not sure whether your card provides such a perk, contact customer service to ask.
• Some retailers, such as Costco, provide an extra year of protection at no cost.
• Some manufacturers will repair a product even after the regular warranty has expired simply because it's good customer service. If you're having an issue with a tech item and the device is past its warranty or extended warranty period, it's still worth contacting the company in case it will make the repair for free. Apple is usually good about this, and it doesn't hurt to try.
Your best bet is to stick with reliable brands and follow the manufacturer's usage and maintenance recommendations. But if you come across a very reasonable charge for an extended warranty — without a lot of caveats on what's not covered in case of damage or loss — go ahead and buy it if helps you sleep better at night.
Marc Saltzman has been a freelance technology journalist for 25 years. His podcast, Tech It Out, aims to break down geek speak into street speak.