I never buy extended warranties, and here are three reasons why:
1. When you pay for an extended warranty, you've made a 100% payment for repairs the item will probably never need.
2. Guestimate the expected cost: multiply the likelihood of repair work times the cost of the repair. For example, the chance of the product breaking down is perhaps 10%; the cost of repair is perhaps $500. The expected cost is $50. If this is higher than the cost of the extended warranty, then the extra warranty is worth it. If not, then not.
3. Your credit card may provide extended warranties free. My MasterCard doubles warranties to a maximum of one year. OTOH, I've never tried using it, so I don't know what sorts of hoops they would put me through.
I admit: there is that tough period when the devices is more than one year old (the mfg'er's warranty) and less than three years old (the extended warranty coverage). I twice experienced problems where the extended warranty would have been wonderful: my first color notebook computer, where the screen randomly frazzled; and the Dodge Caravan, which cost me thousands in annual repairs as soon as its 3-year-warranty ended.
But then I contrast those two items with the dozens and dozens of household appliances and electronic gizmos that operate effortlessly until discarded. Even for major appliances, we have found it much cheaper to call in the repairman than to have paid for the department store's extended warranty: $150 every few years is cheaper than $150 every year.
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