Soon after buying a new TV or any other expensive electronic item, the cashier will almost immediately ask you to purchase an extended warranty plan for a few hundred dollars. I know many people who always get warranties regardless. The thing you need to ask yourself is:

1. How likely is it for the item to fail?
2. How long is the manufacturer’s warranty?
3. Do any of your credit cards add warranty to the manufacturer’s original warranty?
4. Will you actually need the additional years of service?

Here’s my explanation of why I always deny extended warranties.

• I do my research. Some manufacturers have a notoriously high return rate while others don’t. Depending on the item, do your research, read reviews, and then determine if the likeliness of failure exceeds your threshold.
• The manufacturer’s warranty is adequate. Most warranties for electronics items are one year, which is more than enough time to determine if the product will last. Many electronics break within their first year, thus it is safe to say if it didn’t break in the first year, it probably won’t in the following year.
• It is simply too expensive and does not pay off. For my $700 TV, the extended warranty was $300, almost half the cost. Say my TV somehow breaks in three years. Since I didn’t buy the warranty, I’m up $300. I can then sell my broken TV for about $300 and recoup $600 of the $700 original dollars. Note, this is in the minute likelihood of the TV actually failing.
• This isn’t the ’90s anymore. With improvements in the manufacturing process, electronic failures are getting increasingly rarer. In my years of IT, I’ve never seen an LCD monitor break, but CRTs are a different story.
• Instead of buying the warranty, save your money for when you might need it. In the event that your item does break, you may be able to get it repaired for less than what the warranty would have cost you.
• And finally, to be blunt, I simply don’t buy extended warranties because my electronics don’t break. Take care of them and they will take care of you.

Here is a great article that covers some points I’ve mentioned. It’s a good read as they go into more detail on a broader array of items.

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