Our colleagues at the Consumerist reported this week on the nine most common extended warranty sales pitches, as reveled to them by an industry insider. The story underscores a point we've made for years, that extended warranties are a bad idea. Our position is based on extensive surveys conducted by the Consumer Reports National Research and Testing Center. Among our findings:
- Appliances usually don't break during their warranty period, typically three years. For example, our appliance-repair-history data have shown that the likelihood that your gas range will need repair in the first three years is less than one in five.
- When breakdowns occur within the extended-warranty period, the average cost of repairing the appliance is not much more than the average price paid for the warranty.
- Extended warranties often contain loopholes, such as not covering problems caused by normal use.
Keep that in mind the next time you're shopping for an appliance and the saleperson says "We cover normal wear and tear while the manufacturer doesn't," number seven on the list of pitches.