The Golden Rule for Extended Warranties

In general, extended warranties don’t make a lot of sense. Retailers push these warranties very hard because they are their single most profitable item. Many stores even give their employees commissions on them. It’s kind of like gambling, both you and the house can’t win. Simple math will tell you the reason they are so profitable is that far more people purchase these contracts than ever use them. If you are buying a cordless phone, toaster, small appliance, etc, skip the extra $10-$15 dollars. Chances are if your item does break in a few years, you will want a new version anyway and it will be cheaper. The one exception to this rule is large ticket items such as a Plasma or LCD TV. Despite their lofty prices, these items come with pretty skimpy warranties. If you are going to shell out a few grand on a highly technical product, it may be worth a few extra hundred dollars for the piece of mind.

Check out more money saving Tips & Tricks from Bobby’s Best.

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