Should You Consider an Extended Warranty?

By Jennifer Hunter, Ph.D., University of Kentucky Family Finance Extension Specialist

Extended warranties are available on a multitude of items ranging from DVDs to major household appliances and automobiles. Often it can be difficult during the few seconds you have at the cash register to make an informed decision about purchasing an extended warranty for a product.

An extended warranty is in many ways like insurance; designed to fix or replace your item if it is broken or damaged within a specific timeframe. Insurance is typically purchased to limit your financial risk on large ticket items, like your house or home, in case of an unexpected costly event. The need for insurance, a service-plan, or extended warranty is much less on general household items.

On small items, it is not often cost or time effective to purchase an extended warranty. Extended warranties on DVDs, for example, are typically very inexpensive, so it may be easy to say yes to the extra $2.00 to $3.00 at the cash register. In theory, it sounds great that a DVD will be replaced if it gets scratched or broken. But before saying yes, think about how many DVDs you have actually scratched or broken. Can you hold onto the receipt and other paperwork needed to claim the extended warranty? Would you be willing to go through the process to receive the replacement DVD? After giving these questions a little extra thought, you may realize it would be best to save the extra money.  

What about bigger items? Before heading to the store to purchase a larger household item, do your homework. Start by searching online for consumer reviews about the specific product that you are interested in. Some websites, like, will even provide brand comparisons that often include reliability and repair information.

Salespeople and cashiers often highlight the benefits of having an extended warranty. Stores typically have a large profit margin on the sale of extended warranties, so salespeople are motivated or incentivized to sell extended warranties. However, prior to purchasing an extended warranty for an item, be sure to ask your salesperson:

  • Does the item have a manufacturer’s warranty? 
  • If so, how long does the warranty last and what does it cover?
  • What are the most common repairs for this product? 
  • How much does the average repair bill cost?

The length of the manufacturer warranty may vary from 30 days to three years, depending on the product. The majority of manufacturer warranties will last at least 90 days; this initial time window protects you in case your product has a factory defect. Try not to let the product sit unopened after purchase, open and test the product during the manufacturer warranty period to ensure it is working properly. 

 If you do decide to purchase an extended warranty, here are three quick tips:

  1. Read the fine print. Warranties often have exclusions, meaning they may only repair or replace the product under certain conditions.
  2. Keep the paperwork. Be certain to retain all paperwork associated with the original product purchase as well as the extended warranty.
  3. Do the follow-up, if necessary. Be willing to follow-up on the warranty if the product does break. Know who you need to call and whether you need to use specific service provider. Find out whether the store has an on-site service provider or if you will you need to mail the item. And if you need to ship the item, determine who is responsible for postage. 

 Understanding how the extended warranty process works and knowing exactly what it covers will help you make a more informed decision about whether it is added protection that you truly need. 

Take the Pledge

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Take the America Saves Pledge

Tip of the Day

  • Written by Administrator2 | January 7, 2014

    Second saving strategy: Save for emergencies

Saver Stories View all »

Starting and Continuing a Personal Finance Journey

Written by Sara Cooper | December 23, 2013

When Kiara Hardin, now a junior at Western Illinois University, became an intern with the Chicago Summer Business Institute during her sophomore year of high school, she began her personal finance journey. The program required participants to open a savings account.


Taking Steps Toward Financial Fitness

Written by Tammy G. Bruzon | November 7, 2014

Nicky Vasquez learned about Virginia Saves when she attended her first class with Bank On Virginia Beach. The instructor shared how important it was to have a written savings goal, and the entire class joined Virginia Saves as the first step toward financial fitness.


Inspired to Build Savings By Starting Small

Written by Great Lakes Michigan Saves | April 19, 2016

With little-to-no money in the bank and living on a limited income with her adult daughter, Sharon wasn’t sure if building up savings for her future was even possible. “At my age, to put debts behind me would be a relief,” she said, but she wasn’t quite sure how to even get started with a savings plan. That all changed when Sharon attended the Great Lakes Michigan Saves Pay Yourself First Saver’s Summit during America Saves Week.


Receive Updates

Sign up for Texts

Written by Tammy G. Bruzon | July 15, 2014

Sign Up

Sign up for Emails

Written by Super User | September 16, 2013

Get Emails

Take the Pledge

Written by Super User | September 16, 2013

Start Saving