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10 Reasons The Extended Warranty is for Suckers

extended warranty is for suckers - wall of televisionsAhhh the extended warranty…my old friend…and now, my arch enemy. It used to make total sense. I purchased a $900 TV…it might break, so I figured I’d better pay $150 to cover it so I’m not out the full $900 if it decides not to turn on one day. As it turns out, this extended warranty was (and still is) a joke. And, not once have I been glad that I purchased it! The extended warranty is for suckers, and I’ve got 10 solid reasons that back my story.

10 Reasons the Extended Warranty is for Suckers

“Wowwwwwwww,” expressed my 2.5 year old daughter when she walked into Best Buy for the first time in her life (what can I say, we don’t shop much!). Unfortunately, the entire experience wasn’t quite as dazzling as those first 5 seconds.

We went there for a TV that was on sale for just $99. We’re going to use it in our unfinished basement to play workout videos while we flail our arms and legs in an effort to burn calories and eventually become mistaken for young supermodels. It’s still a work in progress, but we have high hopes! 😉

After we grabbed the TV, we browsed the store for about 2 minutes, then quickly staked our place in line, two slots behind the dad buying some Beats headphones for his son, and directly behind the 20-something year old buying a $20 Xbox video game.

This is when the “unfortunate” part of our visit began…

“Hi there. Did you find everything okay? Nice selection with the headphones. This really is some premium gear. But you know, it’s obvious that these get a lot of wear and tear throughout their life. Luckily, we offer some help for that.”

…the cashier glances up at the growing line that’s forming due to his added bits of conversation, but appears like he could care less…

“For just $20, we could insure these bad boys and you’d be covered in the unfortunate event that they should get damaged or broken.”

The dad gave a half smile, half annoyed look and politely said, “No thanks.” He continued through the purchase process and reached for his receipt.

“Now just so you know, even if you walk out of here without a warranty, you do have a two-week grace period where you can come back and purchase the warranty, should you change your mind…”

That poor dad was tripping over his kids trying to get out of there so he didn’t have to listen to another word.

Then came the Xbox video game purchase…

“Obviously, these things get a lot of wear and tear. With that Xbox laser reader, it could burn up your disc over time and cause it to work improperly. For just a few bucks, you can get yourself covered…”

I think that poor guy got suckered into it…

And then it was my turn to listen to the spiel…

“Hello sir. Now, obviously…”

I just couldn’t handle it. I couldn’t listen to that condescending poindexter for another two seconds. So, I cut him off and simply stated, “I don’t need a warranty. If this thing ever breaks, it’ll probably be pretty much worthless at that point anyway, so I’m better off without the warranty.”

“But sir, you could….”

…I cut him off again (oops..I probably wasn’t teaching my 2.5 year old very good manners, but she needs to learn how to not get pushed around too) “Nope, I don’t need the warranty.”

I walked away with the TV, without the warranty, and with one more smart comment from the cashier (something like…”Keep that TV upright. I’d hate for it to break without a warranty…”). Yeah…sure…thanks buddy….

I declined the warranty, just like I always do. But why? Why am I so against extended warranties? I’ve got 10 reasons… 10 reasons an extended warranty is for suckers.

1) I Don’t Ever Say Yes to Pushy Sales Techniques

There’s a reason retail stores don’t try to sell you on the extended warranty when you’re browsing for TV’s in the isle with all the time in the world. They want you to feel uncomfortable and pressured…standing in line with people waiting for you. You need to make your decision NOW! What’s it going to be???

The store wants to make you feel obligated to say, “yes”. And nearly 1/3 of customers actually do…

When I’m in these situations, I’ve taught myself to say no every time. If I ever feel like I made a mistake, I can always go back and buy the warranty (or extra product, or whatever it is). But you know what? That’s never happened. I’ve never felt regret for saying, “No” to pushy sales people…in any situation.

best buy - extended warranty is for suckers2) Extended Warranties are Like the Poker Tables – The House Always Wins

You know that buddy of yours that ‘always seems to win’ when he goes to the casino?

He doesn’t.

The law of averages (along with the probably of each game in the casino) tells us that, on average, the house always wins. The same is true for extended warranties. Sure, there might be someone out there that buys a $2,000 washing machine that breaks at the 1.1 year mark and they’re super happy that they purchased the extended warranty. But, for every 1 of those people, there are 1,000 that never get any use out of that extra $200 they shelled out at the time of purchase.

To hammer this point home, let me tell you about my days working as a merchandising analyst of a large office retailer…

During those Black Friday deals, this particular retailer would intentionally sell their laptops at below cost because they knew they would earn far more on the extended warranties anyway…

The money isn’t in the technology sales anymore…it’s made on the suckers that go for the extended warranties. That’s right, the extended warranty is for suckers…

Related: 7 Goals You’ll Want to Set For 2019

3) Most Products Have a 1-Year Warranty on Them Anyway

You maybe haven’t ever thought about it, but you’re almost always buying a warranty on a product that already has a warranty! That’s right. The manufacturer typically has a 1-3 year warranty on their product. If something broke or malfunctioned, you could call them up and they would either fix it or send you a new one!

….so….why are you spending the extra money on the extended warranty…? Double the warranty coverage does NOT result in double the money or protection.

4) You’ll Probably Lose the Warranty Info

I don’t know about you, but when I’m handed a tiny receipt or warranty, I set it aside for filing…

  • About 50% of the time, it actually gets filed.
  • And for those that actually get filed, I’ll remember where I filed them about 0% of the time…

If my product ever broke and I started digging for the extended warranty (assuming I even remembered that I had the extended warranty), it would probably take me hours to find it. And, now that I’m a dad with two kids and a wife, my time is precious. I would NOT want to spend my Saturday morning hunting down a warranty that might save me a few bucks.

Chances are, you’ll lose the warranty too, which makes it absolutely ludicrous to buy in the first place. Yet another reason why the extended warranty is for suckers.

which debt to pay off first5) Your Credit Card Might Cover You

Credit cards have a ton of benefits that many people never even realize – one of which is the extended warranty.

According to Nerd Wallet, there are three major credit cards that cover you for extended warranties:

  • American Express,
  • Visa, and
  • Mastercard

So you know what? Most of us already have a form of an extended warranty because we paid with our credit card!

Again…buying an extended warranty is for suckers…because you probably already have coverage through your credit card!

Related: 8 Reasons Your Credit Score Matters – And How to Improve It Quickly

6) Technology and Appliances Are Pretty Solid These Days

You know the phrase, “They don’t make things like they used to…”? Well I’m glad!! Just 50 years ago, it was common for cars to have major issues before the 100,000 mile mark. (You know why they had trunks back then? It was a place for you to put your tools and spare parts!!) Today, many cars can make it to 200,000 without us really thinking about it.

The same goes for technology. Remember the days when you had to adjust bunny ears and pound on your TV to get it working right? And even after all that, the picture was still fuzzy. Today, the picture quality on televisions is simply stunning, and they typically last over 10 years (which, at that point, they are totally obsolete and you’ll probably be ready to throw it away even if it is still functioning properly).

Chances are, your TV or appliance is going to last a long time. Spending money on the extended warranty is a total waste of your hard-earned dollars.

7) Used Products Tank in Value

Let’s say 4 years go by and your TV actually does start acting up on you. You paid $300 for it when it was brand new. Today, it’s probably worth $40 (if it was actually working properly)…or maybe even less. Do you really want to get it repaired at that point? Or would you rather just pony up a little bit of money and buy a new one?

For me, I’d rather make the decision to either do without one for a while, or buy a new one that’s way better than what I’ve got (and at probably half the price of what I paid four years ago…which leads me to my next point).

big screen tv - extended warranty is for suckers8) Technology Gets Cheaper Every Year

I was sitting with my brother yesterday watching a few football games, and he started talking about this 75″ TV that he wanted to buy (he’s always been a big TV buff). The cost was only $800 or so. Out of curiosity, I asked him what a big screen TV would have cost him in his younger years.

This is about the time my eyes started bugging out of my head…

His answer? For a 65″ TV that he bought in 2000, the cost was $4,000.


As technology advances, things are also becoming much cheaper. That 65″ TV from 20 years ago would only cost $600 today and would be far superior to that $4,000 brick of a TV back then!

Soooo…why would I want to warranty something that will soon be obsolete? Especially when all the good stuff will be so cheap anyway? That’s right…it makes absolutely no sense. The extended warranty is for suckers…hands down, no doubt about it.

Related: How Much Money Did You Lose to Depreciation?

9) Extended Warranties Can Be Found Cheaper Elsewhere

If you really do want an extended warranty, saying yes at the cash register is probably the absolute worst place to do it – simply because it can be found for far cheaper elsewhere! Companies like Square Trade offer extended warranties on your items for (often times) less than half the price of retailers!

Stop getting ripped off at Best Buy. The extended warranty is for suckers. Be smarter and just say no.

10) You’re Probably Spending Money You Don’t Have

For most of us in the world that are embracing this life of constant credit use, we probably don’t have the cash to buy what we’re getting anyway…let alone pony up the extra dough for the extended warranty. But that’s why most people get the warranty right? Because they barely had the money to afford the thing they bought in the first place and they figure that they won’t have enough to replace it if it breaks. So, the extended warranty seems like a great option!

If you don’t have the cash buy that TV or washing machine…then you probably shouldn’t be buying it in the first place. And if you do…please don’t also buy the extended warranty that you can’t afford!

Are You Convinced? The Extended Warranty is for Suckers…

Have you ever bought an extended warranty? Well that officially makes you a sucker…just like me. BUT, you don’t have to be a sucker again now that you know the facts!

When that pimply-faced teenager tries to pressure you into a warranty on your next $10 purchase…just smile, tell them you’d rather not, and try not to punch them in the face when they continue their spiel anyway. 😉

The extended warranty is for suckers…Have you ever been a sucker?

Money Save Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. I guess we have to agree to disagree on this one 🙂

    6) Technology and Appliances Are Pretty Solid These Days

    I couldn’t disagree more with this, certain appliances are made to a fraction of the standard they once were.
    Good example would be refrigerator.
    I also factor my ticked off feeling of having to pay someone 200 to fix the ice maker on a 2000 dollar appliance.

    • Yeah…refrigerators might be the exception. BUT, they also have way more features these days, which means more things have the ability to go wrong.

      Also, even if you had an extended warranty, you’d probably still have to pay for the labor, which is the majority of the expense anyway (fine print…it’s always a blast).

  2. It paid off once for me. Brand new car (last one, now buy used) three years later thousands for electronics.

    • Yeah…that’s the one of the reasons I don’t buy new cars. You never know if it the make and model is a lemon until after you already own it. I’d rather buy a 3-4 year old car that’s been known to be solid and still smells fairly new. 🙂

  3. Right on! Automobile retailers are the worst practitioners of high pressure sales techniques when it comes to extended warranties. Financially, it makes absolutely no sense for a consumer to purchase an extended warranty. The cost of the extended warranty goes up with lower deductibles. Then watch the fine print. Extended warranty policies are infested with all types of exclusions and conditions. And there is a time limit on the life of the extended warranty. Less than 20% of extended warranty purchasers ever reach the break even point.The profit margins on the policies are substantial. No wonder retailers push it so hard.
    A national used car retailer that I know (and this is common practice among all auto dealers) pays their salespeople quite handsomely for selling the extended warranty. A salesperson can increase their compensation by more than 50% by selling the extended warranty. Salespeople are expected to sell extended service plans to over 70% of their customers or they are booted out.
    This results in a perverse incentive for the salesperson. The salesperson will steer a customer to a lower priced car so that there is enough room to sell an extended warranty and be under the loan approved amount.
    A buyer would be way ahead by setting aside the cost of the extended warranty and using it to cover unexpected repairs.

    • Yup – people waste so much money on insurance and warranties. If they just learned to save up their own money, they’d save thousands of dollars over the course of their lives!

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