Extended Warranties on Most Products Are a Bad Buy
Consumer Reports current newsletter reports that extended warranties on electronic products such as televisions, audio equipment and cameras are a bad buy. One tip off that the service contracts are overpriced is that retailers typically pocket 50% of the purchase price. Buying these products means betting on three unevents happening under the right circumstances: 1) the product breaks during the first three or four years of ownership (unlikely because most products don't break down that time period), 2) that the product will break after the manufacturer's warranty has expired, which is unlikely, and 3) the cost of repair will exceed the cost of the warranty. Consumer Reports surveys show that repair costs are not much higher than warranty costs.
