Clark Howard: I’ll never buy a product’s extended warranty
Consumer expert Clark Howard’s column appears here each Thursday in conjunction with Deal Spotter, a weekly print section in The Atlanta Journal-Constitution.
The other day, my wife went to a specialty electronics retailer to get some equipment that I use when I broadcast the show from my home. As she’s checking out, the salesman asks her how long of a term of extended warranty she wanted on the equipment. (Not if she wants one, but what length of term she wants!)
The salesperson continued, “Clark Howard buys extended warranties. He came in recently and bought a pair of headphones and took the warranty on them.” So my wife said, “Oh, he did, huh?”
Next the man wanted to show her a bogus bill of sale for me reflecting a purchased extended warranty. The guy had no idea he was speaking to my wife! I really wish she would have asked to see it, but she declined and the whole issue was dropped.
My position on extended warranties remains the same. I don’t like them and I don’t buy them at any store.
Never buy an extended warranty on appliances or electronics. Salespeople will tell you that an extended warranty “protects your investment.” But a TV, a washer or a DVD player is not an investment.
When it comes to real estate, I only recommend that sellers consider home warranties as a way to provide confidence on paper about the house to a potential buyer.
The only meaningful exception to my extended warranty rule is on a car. Only consider a warranty if you know you don’t have enough savings to pay for a major component of a car breaking. (If you do have enough saved, don’t buy that warranty.) And then I only suggest the car manufacturer’s own warranty; never buy a third-party auto warranty.
Remember, anytime anybody at any retail store tells you I buy warranties on their products, just know that they’re lying!
Find more answers to your consumer questions at ClarkHoward.com. You can also listen to his radio show live 1-4 p.m. Monday through Friday on AM 750 and NOW 95.5 FM News/Talk WSB.
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15 comments Add your comment
Craig Smith
June 23rd, 2011
6:27 am
Clark! Come on…why aren’t you going to the store to confront the salesman????? That’s not exactly a little lie he told. How many of your readers maybe have believed him? Don’t let him get away with this.
Boobie Bowden
June 23rd, 2011
6:57 am
Been following much of your advise for years. This week your “auto extended warranty” position bought me a new transmission at 92,000 miles. Thank you, Sir.
thom71gt
June 23rd, 2011
7:17 am
Sometimes I agree, sometimes I don’t. In this case all I have to say is “It depends” I have had to replace the power supply for my laptop several times. The power supply, the first time I replaced it, cost $90. I bought a 1 year warranty on it for $9.95. Since then I have had to replace it twice. Second time would of cost me the same, $90. The third time, the cost of the unit had come down to about $60. However, since I bought the warranty on the first model I spend a total of $0 for the next two. Had I not of bought the warranty, I would of spent a total of $240.
Streetracer
June 23rd, 2011
7:30 am
I have always figured that firms trying to sell extended warranties weren’t very confident in their product’s reliability. Look for a supplier with a little more pride in his product.
jw
June 23rd, 2011
7:38 am
Not so true Streetracer – most of those warranties are in store and are very generic in nature – they aren’t tied to the product at all.
I’m like you, if say Sony offered the warranty, not Best Buy, then I might have your exact same feelings. I would wonder why they would be so quick to offer more warranty protection. Those in-store extended warranties have little, if any ties to the product you are purchasing it for.
As stated – the car warranties are different – 3rd parties are NOT the way to go.
Bill
June 23rd, 2011
7:41 am
My question is this:
Why did Clark need a NEW pair of headphones?
Probably because his old ones were worn out. He, like many others, use a pair more often and in ways they were never designed for resulting in a short life span. I don’t like paying full price for anything…. especially more than once!
My experience has been that if you do the math a “protection plan” (not a warranty) can be very useful and a savings in the long run on a FEW things….
Just ask anyone that has had to replace their smartphone due to dropping it or spilling coffee on it. That $50 phone is suddenly $600….
Headphones…. If they are going to be used during a workout, especially on a daily basis, you bet… You can get a new pair every year when one channel quits. but make sure to buy a new warranty on the new pair so they can be replaced too…lol
Clark is right in SOME cases but not all…. Do your homework and the math.
Feeanch
June 23rd, 2011
7:43 am
One of the best features of having an AMEX is that any electronics purchase is covered for up to one and sometimes 2 years beyond the original manufacurer’s warranty. I purchased an HD TV from Walmart that was 15 months old when it started to pop and hiss and lose sound. Researching this I found it was a common complaint of this Philips brand. I called Amex and they replaced my TV with a different brand TV at comparable price to what I paid earlier.
Deedle Nick
June 23rd, 2011
8:37 am
In-store warranties are huge ripoffs. The only advantage is to the store and the sales rep, who gets a nice commission for selling it.
Another example of a ripoff is the Best Buy “service” for optimizing a brand new computer for $40.00
From a Best Buy blog:
“Our Geek Squad Agents enable up to 100 system tweaks that improve PC performance and functionality, including optimized startup and shutdown, improved menu navigation, quick launch and taskbar cleanup and program shortcut creation.”
What that is saying is that the product is defective ‘out of the box’, but they’ll be happy to fix it for you.
I’ve read of many cases where it was mandatory to pay for the “service’.
I wouldn’t buy water from them if my underwear was on fire.
George P. Burdell
June 23rd, 2011
8:57 am
While we can all cite examples where a warranty worked out well for us or a friend, the bottom line is over the long term they are a huge waste of money. The stores design them to make money on them, sometimes an obscene profit margin, and they have much better data on how often things break and how much it costs to fix. You are entering a financial transaction where one party has much better information to analzye and that rarely works out well for the party with less information. You will be much better off taking the money you would have spent on a warranty and putting it in a savings vehicle to cover any costs that do arise. If you cannot sleep at night worried your TV or some other electronic component will bite the dust, maybe you should spend less on electronics until you get to a point that you can buy them without losing sleep. As far as this salesman goes, that is completely unethical and if it happened to me I would walk away from the transaction completely and go find someone who will act in a more responsible way. By going ahead with the transaction, he was rewarded even though he didn’t close the deal on a warranty.
Kar
June 23rd, 2011
9:44 am
She should’ve at least busted the sales rep to the manager or a corporate phone number about his obvious lie. Not to mention, showing someone’s private purchase slip? I’m sure there’s a big corporate policy problem with that. Based on a big fat lawsuit.
Deedle Nick
June 23rd, 2011
10:02 am
From another blog:
“My in laws almost paid Best Buy for this optimization crap but luckily they decided to decline and got the PC back before they did it. Interestingly enough Geek Squad LEFT the optimizer DVD in the drive. It’s nothing but a DVD of windows updates and a few tweaks run from a executable.”
Best Buy’s cost to run this “service” is practically nil.
Pee Wee
June 23rd, 2011
10:11 am
It depends.As a general rule I follow Clarks advice but if I had not gotten an extended warranty on my teenaged daughter’s Apple smartphone, I’d be out several hundred dollars right now. Their repair store knows us on a first name basis now.
scooby-doo
June 23rd, 2011
11:04 am
When you purchase electronics look at the manufacturer’s warranty info that comes with the product. Some company warranties are better than others and have longer periods before they expire. Lenovo/IBM computers and monitors come with up to 3 years in-house parts and labor. They have a local service center in Atlanta as well. I’ve always had great service with them. They will either send a technician out to your location to troubleshoot a desktop computer at no charge or send a box to put your laptop in for free shipping to their service center with a very fast turn around. Their over-the-phone tech help is free during the warranty, too and Consumer Reports rates them very high with results for fixing technical issues.
Another tip: Buy batteries and chargers for laptops, cell phones and cameras on Amazon.com and you’ll pay a 1/3-1/4 the price instead of buying from the manufacturer and retail stores who mark these accessories up by 300%. I’ve bought batteries and chargers for laptops and cell phones from Amazon several times and have never had problems.
Ray Carroll
June 28th, 2011
10:47 am
I do not listen to your show and I do not put a lot of trust in your opinions but What is wrong with an extended warranty? Usually when the regular warranty expires is when I need service.
Ole Guy
June 29th, 2011
10:07 am
Clark’s story just proves a universal truism…salespeople can be a lying bunch of SOBs. The axiom “let the buyer beware” was never so true. It is for this very reason that, particularly on big-ticket items, buyers should research every conceivable option. Big smiling mug notwithstanding, the buyer’s best interests and those of the salesman are usually/almost always at completely opposite ends of the spectrum.
As much as I respect Clark’s admonitions, I have to differ on his advice to never opt for budget billing on the utilities. Granted, there are months when the budget bill far surpasses the actual consumption for that particular billing period. However, this billing method also allows, over the 12 month period, for a “free financing” of the high usage months. At the end of the year, with the utilitys’ recalcalculations, it all seems to even out.