Newspaper article The Florida Times Union

Extended Warranties - Worth the Sticker Price? Buyers Should Weigh the Price of a Plan against the Benefits It Provides

Newspaper article The Florida Times Union

Extended Warranties - Worth the Sticker Price? Buyers Should Weigh the Price of a Plan against the Benefits It Provides

Article excerpt

Byline: DAVID BAUERLEIN

It seems more than ever that shoppers are being asked to buy an extended warranty for electronics such as cameras and computers.

To Consumer Reports, the answer is "no thanks," but to a growing number of customers, the answer is not so simple.

Target is the latest retailer to offer such warranties, also known as service contracts. It joined the pack in October, going head to head with big-box retailers such as Best Buy and Circuit City. Wal-Mart began offering warranties last year.

"They've been competing on prices for some time, but now they're finally competing on the service, too," said Eric Arnum, editor of Warranty Week, a trade publication.

He said that while an overpriced extended warranty is a bad deal, consumers can find affordable service plans that make financial sense if they shop around.

"I don't see it as something that you can just entirely dismiss as a rip-off," he said.

Still, Consumer Reports has advised shoppers for years to turn down extended warranties. The agreements are bad deals because products seldom break during the coverage time for the service plans, according to the magazine. When there are malfunctions, Consumer Reports said based on surveys of owners, the cost of repairs to electronic items and appliances is often the same as the warranty.

Consumer Reports recommends avoiding extended warranties that exceed 20 percent of the purchase price.

"If you can't sleep at night because you've absolutely got to have it, shop around and make it part of your price search," said Amanda Walker, senior editor for Consumer Reports.

It's important to understand the time period for the extended warranty. Most service plans start the day of the purchase, so they overlap the manufacturer's warranty. If the manufacturer's warranty is one year and the service plan is for two years, the service plan has basically added an additional year of coverage.

Wal-Mart differs from the typical approach because the clock doesn't start running on its service plans until the manufacturer's warranty period ends.

Sometimes, paying by credit card will extend the manufacturer's warranty by up to a year at no additional cost. Gold and platinum credit cards most often give that added warranty protection, so it's worth the time to call the credit card company and see whether you'll receive that benefit, Walker said.

Arnum said shoppers shouldn't be shy about asking stores for the terms of the service plans to compare them. He said for large electronic items such as big-screen televisions, consumers should find out whether the warranty covers in-home repairs and picking up products to take them in for repairs.

david.bauerlein@jacksonville.com, (904) 359-4581

SHOULD YOU PAY EXTRA FOR A SERVICE PLAN? …

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