Extended Warranties: Worth The Cost?

(CBS)  It's bad enough when your microwave goes on the blink. Realizing your warranty has expired is salt in the wound. So is it worthwhile to pay extra for extended warranties? The Early Show's financial adviser, Ray Martin, considers the question.

---

Extended Warranties: Waste of money or worth the cost?
A few years ago, extended warranties were only offered on costly appliances and big-ticket items. But today, these "protection plans" are offered on just about any appliance or consumer electronics products you can buy.

For years, consumer advocates such as Consumer Reports have cautioned against buying extended warranties. But that advice may be in need of updating.

In a recent development, many appliance makers are consolidating the terms of warranty coverage on their products to include one period covering all parts and service. The period is one year; after that, if a part wears out or breaks, you pay. Before this, appliance makers would have warranties with different coverage periods for various parts, ranging from five to 20 years. Now, they say, a simpler and clearer warranty — one that covers all parts and services for the same one-year period — will benefit consumers. The reality is that in most cases, manufacturer's warranties for many appliances will be shorter, so if you want to extend the warranty coverage for periods longer than a year, you will need to pay for it.

Shorter and "simpler" warranties for appliance brands such as Whirlpool, Roper, Estate, General Electric, Hotpoint, Maytag, Amana, Frigidaire, and many other brands went into effect late last year and earlier this year. Some premium appliance brands still offer warranties that apply for more than a year. Some consumer electronics makers have also cut their warranties. For example, according to PC World magazine, Dell used to offer a three-year warranty on numerous products but has cut warranties on some products to just one year — and a few to just three months. Once the manufacturer's warranty runs out, all costs for repairs are borne by the consumer, unless you pay for an extended warranty.

• 1
• 2
• 3
• Next Page »