The only time to buy extended warranties

Don't Waste Your Money

Next time you buy a new car, HDTV or maybe even a toaster, the sales clerk will probably ask you if you want to buy an extended warranty.

Should you? Will it really protect you? Or is it a big waste of money?

What to do when you get the pitch
We've all received the pitch in an appliance or electronics store. We've almost all received a postcard saying our car's warranty is up, and suggesting it's time for a new one.

But a new report in US News and World Report lists several reasons why you should not buy an extended warranty in most cases.
Among them:

    --The original warranty is sufficient in most cases: if something doesn't break in the first two months, it probably won't break for a few years.

    --Extended warranties are filled with exclusions, such as damage from neglect or dropping something.

    --Your gadget will be worthless when it finally breaks.

    --Most items don't need repair the first few years (See #1, above).

    --Your credit card company may offer better protection, such as second year of coverage free, offered by American Express and many "gold" credit cards.

When you may want one
But from the "doesn't that stink" file, one instance where you may wish you bought an extended warranty: If you drop your smartphone and break it. That stinks. The phone that cost you $99 new with a contract can cost up to $500 to replace.

US News says with a $300 to $500 smartphone, coverage through companies like Square Trade, Apple, AT&T or Verizon may be worth considering.

However, with a "basic" cellphone, the extra coverage is usually not needed.  You can replace those phones for $50.

Cars:  Yes and No

With cars, the decision is tricky.

If you are absolutely sure you will keep the car well past its warranty, and plan to "drive the wheels off it," it may be worth paying for extended coverage from the manufacturer (best) or dealer (OK in some cases, but check out their plan with the BBB first).

However, post cards that show up in the mail are often from unscrupulous companies that offer very little coverage, with many exclusions.

And remember, if you think you may trade in that car after three or four years, then you can safely skip the extended warranty: you will essentially be throwing away money.

The Bottom Line

If you can't sleep at night without having an extended warranty, just make sure you read the fine print before you sign on the dotted line.
If you find a lot of exclusions and reasons they won't pay -- such as you dropping it -- it may be a case of don't waste your money.

As always, don't waste your money.

Don't Waste Your Money is a registered trademark of the EW Scripps Co.

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