Consumer Reports wrote:
Retailers are pushing hard to get you to buy extended warranties, or service plans, because they're cash cows. Stores keep 50 percent or more of what they charge for warranties. That's much more than they can make selling actual products. For the consumer, extended warranties are notoriously bad deals because:
* Some repairs are covered by the standard manufacturer warranty that comes with the product.
* Products seldom break within the extended-warranty window—after the standard warranty has expired but within the typical two to three years of purchase—our data show.
* When electronics and appliances do break, the repairs, on average, cost about the same as an extended warranty.
We have long advised against extended warranties. In fact, we feel so strongly that consumers are being misled about them that last year we took out a full-page ad in USA Today (see below) to warn shoppers.
I am hoping most of the readers here know this, but if you didn't know, now you do. I was reminded of this by a great article over at the Consumerist:
http://consumerist.com/373058/leaks-best-buy-internal-doc-says-their-extended-warranties-are-a-myth
^^ chock full of interesting Best Buy perspective, as well as a handy chart that shows the average failure rate of 3-4 year old electronic items. Based on the electronics chart, you can see there are a few instances where getting a service plan might work out - I've know a few friends and family members who found benefit; nevertheless, be a cautious and educated shopper.
