Why Savvy Shoppers Skip Extended Warranties—And What To Buy Instead

When faced with an extended warranty offer at checkout, most consumers hesitate. Should you protect your investment? The answer for most purchases is simpler than you think: in the majority of cases, you’re better off passing.

The Real Cost of Extended Coverage

The extended warranty market generates roughly $40 billion annually—a staggering figure that raises an obvious question: who’s really profiting here? When you’re already committing to a major purchase like a new appliance or electronics, adding an extended warranty essentially doubles your upfront expense. Research from Consumer Reports consistently shows that repair costs, should they occur, typically fall well below what you’d spend on warranty coverage. For most consumer electronics and household items, this math simply doesn’t work in your favor.

What’s Actually Covered (And What Isn’t)

Before even considering extended protection, read the fine print carefully. Extended warranties come loaded with conditions and exclusions. The Federal Trade Commission warns that these policies often require specific maintenance routines or proper care standards. Break them, and the company reserves the right to deny your claim entirely. Many consumers discover too late that the very scenario they worried about—accidental damage, wear and tear, or improper handling—falls outside coverage limits. It’s a built-in escape hatch that protects the warranty seller more than the buyer.

Your Existing Protections Are Stronger Than You Think

Most new products already arrive with manufacturer coverage, typically spanning around 90 days or longer for major appliances. This isn’t some minimal protection either—companies now routinely honor claims beyond the stated warranty period as a customer service gesture. In today’s social media environment, honoring an out-of-warranty repair generates positive buzz and customer loyalty. The manufacturer’s reputation depends on it.

But there’s more: if you paid with a credit card, you may already have built-in purchase protection that extends well beyond the manufacturer’s window. Premium credit cards often include accidental damage coverage, theft protection, and other purchase guarantees that rival or exceed traditional extended warranties. This cardholder benefit costs you nothing additional and frequently provides superior coverage.

The Retailer Safety Net

Don’t overlook your relationship with the retailer itself. Many major retailers maintain liberal return and exchange policies that serve as an informal warranty backup. If an item fails within weeks or months of purchase, retailers like Costco and others will typically accept returns or arrange replacements without forcing you through a warranty claim process. This option often proves faster and simpler than the extended warranty route.

The Smarter Approach to Peace of Mind

Instead of spreading your money thin across multiple warranty layers, consolidate your protection strategy. Use a reputable credit card with solid purchase protections, buy from retailers with strong customer service records, and set aside the savings from skipping extended warranties into an emergency repair fund. For most household goods, this three-pronged approach delivers more reliable protection than any extended warranty contract. Whether you’re purchasing appliances, electronics, or even considering coverage on higher-ticket items, this philosophy holds true: the best extended warranty plan is often no plan at all—just smart purchasing habits and the right backup systems already in your pocket.