It may be tempting to buy extended warranties with all those high-tech gadgets on your holiday list, but the experts say they are almost always a waste of money.
The experts have done the math, taking into account the odds that a product will break, as well as the price of a warranty versus the cost of repair or replacement. In almost every instance, these warranties represent pure profit for the seller and pure loss for the buyer, they say....
Paradoxically, the people who are late in adopting new technology buy the bulk of the extended warranties, even though the products are less expensive and more reliable by the time they are buying, said Amar Cheema, a business professor at Washington University in St. Louis. He theorizes that these people are less comfortable with technology and thus more vulnerable to sales pitches for extended warranties.
"This is why you see them as an add-on cost that pops up after you have already made the commitment," Professor Cheema said. "At the checkout, they say, 'Hey, you just bought that for $900, pay just $150 for an extra two-year protection plan.' "
| • | The word on warranties: don't bother
After the sale The New York Times, Wednesday, Nov. 1, 2006 Byline: David S. Joachim |
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