4 Product Warranties That Are a Total Waste of Money

Geek squad logo at Best Buy, extended warranties

Extended warranties on some purchases are good, but they can also be a waste of money | Tim Boyle/Getty Images

You’ve just plunked down hundreds or thousands of dollars on your latest big purchase, and the salesman asks if you’d like to purchase the extended warranty. Maybe you’re replacing your refrigerator, or you’re buying your first new car. If the sales associate is worth their salt, they’re going to push the warranty pretty hard. It’s part of how their own company makes money, after all. A skilled salesman or a need for your own peace of mind might convince you to buy warranties when your receipt gets into triple digits. And while some warranties can be worth it, many of them cost more than they’re worth.

Purchasing extended service on a phone or laptop that you’re going to tote along with you everywhere can be worth it, as long as you do your research ahead of time and know exactly what’s covered. Accidental damage protection for things like drops and spills is vital in these cases, U.S. News and World Report says. In other situations, however, the extended warranty is just adding extra dollar signs to your cost, without much reward.

Most people don’t purchase the warranties because they think a car or appliance will fail, Rajiv Sinha, a marketing professor at the W.P. Carey School of Business at Arizona State University, told U.S. News. If they had that little faith in the product, they wouldn’t purchase it in the first place. Instead, they’re most tempted to purchase the warranty because they would feel foolish if they turned down the protection, only to have their shiny new purchase break after a few years of use. “They’re buying a policy to insure them against their own guilt in case the product fails,” Sinha says.

If you can tear yourself away from the emotional side of warranties, you’ll end up being able to turn down the ones you don’t need and save yourself some money. Here are four product warranties you should likely avoid.

1. Appliances

Brand new gas stoves in a shop

Brand new appliances | Source: iStock

We’ll start with the one that should be easiest to turn down, since common sense has told us for years that purchasing an extended warranty on refrigerators, washers, dryers, and stovetops is simply insurance money padding the pockets of your local hardware store. Consumer Reports is notoriously against these types of warranties in particular, since they can add up to 30% or more of the initial product cost. Typically at least half of that cost goes to the store where you bought the appliance, not the manufacturer, meaning it’s simply lining their coffers.

As the Federal Trade Commission points out, these are different from the manufacturer’s warranty, which will often cover most issues within the first year of use. These add-ons go by lots of different names including “service plan,” “protection plan,” and more, but essentially they’re a way to bilk you out of money. Even if your appliance does break down after the manufacturer’s warranty is up, it often won’t cost that much more to repair it than the warranty itself would have. Plus, you’re more likely to get the repair done faster and more reliably if you handle it yourself, Consumer Reports associate editor Anthony Giorgianni attests.

Still not convinced? If you purchase the appliance with a credit card, some card issuers will automatically extend your product warranty for another year. If you’re not sure whether you apply, check the terms of your cards. And finally, if you do run into an issue after the manufacturer’s warranty expires, all is not lost. “Just because the manufacturer’s warranty has expired doesn’t necessarily mean that you’re out of luck,” Giorgianni states. “If you contact the manufacturer and you make a good argument, there’s a good chance the company will pay for the part or even all of the repair.”

2. New cars

cars parked in a line

New cars | Source: iStock

Aside from purchasing a home, buying a new set of wheels is likely the most expensive thing you’ll buy. If you’re buying used, extra protection can be a good idea. However, extended warranties on new cars typically aren’t worth the price. Consumer Reports’ skepticism about extended warranties applies to new car purchases as well.

According to one study conducted by the publication, 55% of people who purchased an extended warranty never used it, even though they can often cost thousands of dollars. Of those who did take advantage of their warranty, most repairs cost less than the price of the warranty itself, meaning customers still lost money on the deal. Only about 25% of respondents in one Consumer Reports survey said they would definitely buy a warranty again.

Most times, you can rely on the car to be reliable, especially if you’ve done your research. If you plan to only have the car for a few years, chances are any necessary repairs will already be covered by the manufacturer’s warranty. At that point, you’re literally throwing money away to have double coverage you don’t need. Dealer warranties can be an especially bad deal, Bankrate points out, since the terms can dictate that any repairs must be done at that one location. If your car breaks down on a vacation, you’re out of luck for getting those costs refunded.

If you’d still like the peace of mind of knowing you can handle any unforeseen repairs, several experts recommend taking the money you would have spent on a warranty (or even half of it), and putting it aside in a savings account or already-established emergency fund. You’ll still have the money necessary for many repairs, but otherwise you get to keep the money you’ve earned instead of handing over another chunk of it to the car dealership.

3. Carpet

Spilled coffee creating a stain

Not cleaning your carpets could void your expensive warranty | Source: iStock

If you’ve ever remodeled a portion of your home, you know that flooring can be one of the largest expenses. When you purchase carpet, the retailer might offer an extended protection plan against damage or unusual amounts of quality loss. However, think twice before signing up for the plan.

“Unfortunately, warranties in the carpet industry rarely do much more than give customers a false sense of security that persuades them into a purchase,” the experts at Carpet Captain assert. “All too often warranties are written in such a way that many customers have voided them in the first two years.”

As the publication goes on to explain, warranties for carpet and other flooring are designed so the homeowner fails in their repair claims, simply by not reading the fine print. Carpet padding is often a requirement, and typically comes with incredibly narrow specifications for installation. It’s up to you to make sure those guidelines are followed by the installers, or you’ll otherwise void your warranty from the start.

In addition, many warranties require regular professional cleanings, which can be pricey in and of themselves. What’s more, you’ll need to hold on to those receipts indefinitely, to prove you had the service completed. You’ll also need to get an itemized receipt from the flooring retailer that proves the price you paid for the carpet itself, not a lump sum for the installation and padding as well.

“Carpet warranties are more of a sales tactic than consumer protection. Since warranties are easily voided, manufacturers can provide extended warranties that they know are likely to outlast the carpet,” Carpet Captain summarizes. Instead of looking for extra insurance on a trendy swatch of flooring, spend some time researching the features of quality carpet. In that way, you’ll be able to skip the warranty and make a selection that will last for years.

4. Some furniture

furnished living room interior

You want to protect your investments, but make sure you read the fine print | Source: iStock

Furniture, especially high-quality pieces made with leather or other precious materials, can also be a hefty expense. It makes sense that you’d want to protect your investment with an extended service plan, but make sure you do your research and know exactly what you’re signing.

For example, Macy’s “Worry No More” warranty program is one of the reasons the retailer received abysmal reviews on Consumer Affairs. The blogger at Pocket Mint provides just one example of how Macy’s third-party warranty partner found ways out of honoring the agreement, with the blogger going so far as to say that the entire program is a total scam. In fact, this program is why Macy’s landed on our list of places not to buy furniture.

If you’re spending a boatload on a new bedroom suite or you’re purchasing leather upholstery for the first time, you might want to look into the warranty program the retailer or manufacturer offers. Just make sure you actually read the fine print to see what’s not included, and check online to make sure the warranty program isn’t leaving customers hanging.

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