When do Extended Warranties Make Sense?

worst extended warranty ever

This extended warranty makes no sense whatsoever.

Extended warranties can be quite a racket. Pictured above is one of the worst examples I have ever seen. The warranty price is a whopping 40% of the item's price! That is insane to me! Paying 40% more to protect an item like a tablet which will be outdated in 2 years is crazy. There are however, situations where purchasing an extended warranty does make sense. Here are a few:
when do extended warranties make Wedding rings. This should be a no-brainer. I'm a living example of why this is one of the easiest purchases to buy the extended warranty on. We bought both wedding rings and the engagement ring from Zales. I think the lifetime warranty extension on our rings was a few hundred bucks. I paid it. And not like most other extended warranties (with a frown), rather, I happily paid this one. I mean, it was a lifetime extension. On our wedding rings. Sure enough, not 2 years into the marriage, one of Katie's diamonds fell out (and we didn't notice) and the diamond was gone. It was a very nice thing to just be able to tell her, don't worry hun, we'll take care of it. And we did. It was easy, it was free and it was painless. Just like that, the warranty had paid for itself. Now we've got an entire lifetime left to still use it if necessary.

Before buying an extended warranty, check with your credit card company. Many CC companies offer complimentary warranties when you use their card to purchase a product.

Cars. This might get some disagreement, but I'm again writing from experience. I bought the extended warranty on my 2007 Nissan Altima for around $1200. Of course, they worked it out so I would only pay a few extra bucks on my monthly payment. Sure enough, during the course of the warranty, I used it for over $3,000 in unexpected repairs. I also still have about 4 years left on the powertrain extension.

Always find out what the deductible is on any extended warranty you buy. Sometimes they are $0.00, but if there is a deductible, you need to know about it and you need to factor that into your decision in purchasing the extended warranty.

Higher End Electronics. Consider these carefully, and look for extensions under 20% of the actual product price. Anything over that, think about it really hard. If you honestly will not be able to pay for repairs of replace an item over the course of the warranty, it might be a good idea to get the warranty. Here's an example of a better tablet warranty compared to the one at the top of the post:

extended warranty

Much better warranty.

Here, you're paying only $10 more than the top example, but it is for a product that is 5 times as expensive. At just over 10% of the purchase price, this is a warranty I might consider buying.

Check the competition.  Different retailers will offer different warranty protection and pricing.  Costco actually automatically extends the manufacturer's warranty on TV's and computers to 2 years from the purchase date at no extra cost.  If you're already planning on buying the warranty, that could save quite a bit.  Square Trade also offers extended warranties that you can buy online outside of the store.

Apple Products. If you must buy these poorly made products, get the extended warranty because I personally have not had an Apple product that lasted for more than one year with normal use. Their warranties cost a lot, but it's also nice to have the ability to walk into an Apple store as a warranty holder. They treat you a lot better.

Another thing you want to keep in mind is the standard warranty that comes with most products. If the product includes a 1-year standard warranty, that is usually sufficient. Especially for electronics which might not even be kept (think upgrades) for a year.

Extended warranties that generally don't make sense:
• low to mid-end tablets, like the one above
• TV's under $800
• low-end electronics
• technology that quickly advances

In general, if a warranty costs more than 20% of the product itself, it is probably not worth it. You're probably going to be able to repair the item for less than 20% of its cost. Also, just take care of your stuff!

What are some items that you have bought the extended warranty on?
Did you use it?


  1. Marietta says:

    Thank you for sharing your info. I always consider the extended warranty and it’s nice to have some guideline.

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