Warranties: What you should get a warranty for and what you can a skip

When you buy just about any electronics item from any retailer you'll be prompted for a warranty. The fresh faced sales clerk will earnestly tell you that you REALLY need it to protect your new purchase. Think about it - you've just yanked good old Visa from his cradle - do you really want to see that money go to waste with a damaged product 1 day after the initial warranty expires.

Guess what - for many items you don't need a warranty and retailers know this. For many items the product will last just fine for years - you'll never need a warranty and so it's gravy for the retailer. SOME products do fail more than others, however, and a warranty should be considered.

Business Week has a wonderful article on this, which you should read in full Here's some tips from BW in a side bar How likely is this equipment to break?
Most major appliances either fail in the first year because of defects in manufacturing, when the makers warranty is still in effect, or after five years, when the extended warranty has expired, as appliance parts wear out.

How much will it cost to replace?
Best Buy charges $49.99 for a four-year contract on a Magnavox DVD player that sells for $39.99. Enough said.

What will it cost me to repair it on my own?
Consumer Reports figures that a vacuum cleaner or lawn mower can be repaired for two-thirds of the cost of a three-year contract. Britain's Office of Fair Trading discovered that consumers pay as much for a five-year contract on a clothes washer as it would cost to repair it four times.

How long am I covered by the manufacturer?
Most factory warranties cover a year of parts and labor. So the first year of a three-year extended warranty is wasted. And how's this for outrageous: CompUSA charges $17.99 for a two-year replacement policy on a $59.99 Netgear Inc. (NTGR ) wireless router for home networks -- even though Netgear's warranty will repair or replace it free for three years.

Which credit card should I use?
Many card issuers double the manufacturer's warranty for free. If you decide that paying a premium for a peace of mind is worth it, shop around, even after the fact. You don't have to buy the contract from the retailer, and you don't have to buy it when you buy the goods -- you usually have 30 days from purchase. Check with the manufacturer, which often will offer a better deal. For a Satellite laptop PC that sells for just under $1,000, Toshiba Corp. (TOSBF ) charges $199 for a three-year plan that also covers such accidental damage as dropping the laptop or spilling a Coke on the keyboard. CompUSA wants $369.99 for the extended warranty alone.

If you've already bought a warranty and you're having second thoughts, most states require the seller to give you a full refund if you change your mind within 30 days. At least that's something no casino would allow after you've placed a sucker bet.

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