• Skip to primary navigation
  • Skip to main content
Good Financial Cents®
Content is based on in-depth research & analysis. Opinions are our own. We may earn a commission when you click or make a purchase from links on our site. Learn more.
  • Make Money
    • Get Money Now
      • Ultimate Guide to Making Money
      • Need Money Now
      • Get Free Money Fast
      • Make Money Fast
      • Make $1K Per Month
      • Make $100 Per Day
    • Control Your Destiny
      • Self Employed Jobs
      • Make Money from Home
      • Hobbies That Make Money
      • How to Become a Freelance Writer
      • Small Business Ideas to Start
      • How to Become an Independent Contractor
      • Best Online Jobs
    • Passive Income
      • Passive Income Ideas
      • Multiple Streams of Income
      • Extra Income
      • Residual Income Ideas
      • Learn to Sell e-Books
      • Make Money on Facebook
      • Make Money on Tiktok
      • Best Online Survey Sites to Make Money
    • Explore More
      • Best Side Hustle Ideas
      • Make Money for Teens
      • Best Online Colleges
      • Best Jobs No College Degree
      • Become a Millionaire
      • Careers for the Future
  • Manage Money
    • Best Of
      • Budgeting Tools
      • Personal Finance Software
      • Best Cashback Cards
    • Company Reviews
      • Personal Capital vs Mint
      • Personal Capital Review
      • SmartAsset Review
    • Guides
      • Buy or Lease a Car
      • What is Liquid Net Worth?
      • Setting Financial Goals
      • How to Budget
      • Ways to Save Money
    • Explore More
      • How Much Car Can I Afford?
      • Best Auto Refinance Companies
  • Invest
    • Best Of
      • Best Short and Long-Term Investments
      • Best Low Risk Investments
      • Best Online Stock Brokers
      • Best Crypto Exchanges
      • Best Short Term Investments
      • Best Long Term Investments
      • Best Trading Platforms
      • Best Investment Apps
    • Company Reviews
      • Lending Club
      • Robinhood
      • M1 Finance
      • Ally
      • TD Ameritrade
      • Fundrise
      • Betterment
      • Etrade
      • Wealthfront
    • Guides
      • Investing for Beginners
      • Investing Small Amounts of Money
      • Investing in Real Estate
      • No Money Down Real Estate
      • Bonds vs Stocks
      • Peer to Peer Lending
      • Best Hedges Against Inflation
      • Safe Bitcoin Investing in 2023
    • Explore More
      • Bitcoin vs. Real Estate
      • Betterment vs Wealthfront
      • Investing for College Students
      • Stock Market Alternatives
    • By Investment Amount
      • How to Invest $100
      • How to Invest $1K
      • How to Invest $2k-$3k
      • How to Invest $5K
      • How to Invest $10K
      • How to Invest $15k
      • How to Invest $20K
      • How to Invest $30k
      • How to Invest $50K
      • How to Invest $100K
      • How to Invest $200K
      • How to Invest $500K
      • How to Invest $1M
  • Taxes
    • Best Of
      • Best Tax Relief Companies
      • Best Tax Software
    • Guides
      • Federal Income Tax Guide 2023
      • Taxes and Cryptocurrency
      • How to Do Your Own Taxes
      • How to Invest Your Tax Refund
      • Hiring a Professional Tax Preparer
      • Tax Tips for Freelancers
    • Company Reviews
      • TurboTax Review
      • H&R Block Review
      • Taxslayer
      • Tax Act
  • Insurance
    • Best Of
      • Best Life Insurance
      • Best Home Insurance
      • Best Auto Insurance
      • Cheap Term Life Insurance
      • Car Insurance For Young Adults
    • Guides
      • Term vs Whole Life
      • Different Types of Car Insurance
      • Average Cost of Car Insurance
    • Explore More
      • Life Insurance Over 50
      • Life Insurance Over 80
      • $1 Million Life Insurance
      • $2 Million Life Insurance
      • $3 Million Life Insurance
    • Company Reviews
      • Banner Life Insurance
      • Ladder Life Insurance
      • Health IQ
      • Haven Life
      • Policygenius
      • State Farm Auto Insurance Review
  • Retirement
    • Roth IRA
      • Best Places to Open a Roth IRA
      • Best Investments for Roth IRA
      • 7 Roth IRA Secrets
      • Roth IRA Conversion Guide
      • Roth IRA Rules
      • Roth IRA vs Roth 401k
      • Are Roth IRA Contributions Tax Deductible?
    • 401(k)
      • 401(k) Limits
      • 401(k) to Roth Rollover
      • Is 401(k) Enough for Retirement?
      • Maxed Out 401(k): What's next?
    • Traditional IRA
      • Traditional IRA Rules and Limits
      • Traditional IRA vs. 401(k)
      • Simple IRA Rules
      • SEP IRA Rules
      • How Much Do You Need to Start an IRA?
    • Explore More
      • SEP IRA vs. Roth IRA
      • 457 Plan for Successful Retirement
      • 401a Rollover Rules
      • How to Retire at 50
      • How to Retire at 55
  • Banking
    • Best Of
      • Best National Banks
      • Best High-Yield Savings Accounts
      • Best Checking Accounts
      • Best Savings Accounts
      • Best CD Rates
      • Best Money Market Accounts
    • Company Reviews
      • BBVA
      • Synchrony
      • Wells Fargo
    • Explore More
      • 9 Banking Alternatives for 2023
      • What is a Credit Union?
  • Home
    • Best Of
      • Best Mortgage Lenders
      • Best Mortgage Refinance Companies
      • Best Home Warranties
      • Best Homeowners Insurance
      • Best VA Loans
      • Best Mortgage Rates
      • Best Moving Companies
      • Best Home Security
    • Guides
      • Home Buying Checklist
      • Online Home Appraisal
      • How Much House Can I Afford?
      • First-time Homebuyer Programs
      • How to Get Approved for a Home Loan
      • Save Money When Building a House
      • How to Save for a Downpayment
      • When to Refinance Your Mortgage
    • Explore More
      • 15 vs. 30-year Mortgage
      • Home Warranty vs. Home Insurance
      • Veterans United Home Loan Review
      • Quicken Loans Review
      • HELOC vs Second Mortgage
      • DCU Mortgage Review
      • Costco Mortgage Program Review
      • USAA Mortgage Loan Review
  • Credit
    • Best Of
      • Best Credit Repair Companies
      • Best ID Theft Protection Services
      • Best Credit Report Options
      • Best Bad Credit Loans
    • Guides
      • How to Build Your Credit Score
      • How to Raise Your Credit Score in 5 Months
      • How to Dispute Your Credit Report
      • Hot to Remove Collections from Your Credit Reports
      • How Identity Theft Destroys Your Credit Score
    • Explore More
      • What is a Good Credit Score?
      • What is a Bad Credit Score?
  • Debt
    • Best Of
      • Best Debt Consolidation Loans
      • Best Personal Loans
      • Best Student Loans
      • Best Student Loan Refinance
    • Guides
      • What is Debt Consolidation?
      • How to Get Out of Debt
      • How to Get a Personal Loan Approved
      • How to Pay Off Student Loans Faster
      • Should I Consolidate My Debts?
      • Should I File for Bankruptcy?
    • Company Reviews
      • Credible
      • Sofi

Are Extended Warranties on Electronics Really Worth It or a Total Waste of Money?

https://www.goodfinancialcents.com/wp-content/uploads/2019/07/MG_5503-150x150.jpg
  • Written By:
    Jeff Rose, CFP®

    Jeff Rose, CFP®

    Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance...

    Read More
  • Updated: September 3, 2022
  • 5 Min Read
  • Advertising Disclosure

    Advertising Disclosure

    GoodFinancialCents® has an advertising relationship with the companies included on this page. All of our content is based on objective analysis, and the opinions are our own. For more information, please check out our full disclaimer and complete list of partners.

Quality Verified THE GFC® PROMISE
shield check icon
Quality Verified

GoodFinancialCents® partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

shield check icon
Why You Can Trust GoodFinancialCents®

GoodFinancialCents® partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

You’ve been waiting in long lines and you’ve finally made it to the cashier.  You finally have the gift that you’ve been on the hunting for having been in every store in the area.  Luckily, you spotted the deal of the decade in the newspaper and you feel really proud of your accomplishment as you’re pulling out your wallet to pay.

The cashier then asks you, “Do you want to purchase the extended warranty on that?”  Crap.  Another sales pitch.  Or is it?

I’ve often wondered if extended sales warranties are worth it.   When I was in college, I had a certain Pentax camera that I was fond of (yeah, I’m dating myself here a bit).  For an extra $30 – if I recall correctly – I could buy an extended warranty that would allow me to bring it back directly to the store to swap it out immediately.   I was sold.

And you know what?  It paid off.  While on a hiking trip, I slipped and busted my camera’s lens.  Sure enough, the retailer took it back no questions asked.  Score for me.

As I get older now, I start to question if the newer extended warranties are really worth it.   What is also a growing trend our third-party extended warranties.  In some cases, third-party warranties might be cheaper and easier to claim.  Don’t just take my word for it though.

I had a chance to interview Steve Abernethy, CEO of SquareTrade.  SquareTrade’s mission is to provide excellent and affordable warranty coverage to consumers. Our warranties are offered by many fine consumer-oriented retailers such as Amazon.com, Crutchfield and Buy.com.  Their site claims to offer warranties up to 70% lower than their competitors.

I did a quick tour of their site and for a recent item that I purchased – my Flip Ultra HD camera – at Best Buy the extended warranty would cost $22.98 vs. $19.99 at Square Trade – for a savings of 14.9%.

I was curious to learn more about SquareTrade and extended warranties so I asked Steve the following questions.   Introducing Steve……

1. What’s the biggest misconception regarding in-store warranty policies?

Most stores’ salespeople want you to believe that you don’t have a choice on warranties. Ironically, they offer 20 TVs but you only have 1 warranty choice at the checkout. They also want you to believe that you have 1 chance to buy at the counter, with no ability to research, and that their offer is your only chance at protecting your device.

You do have a choice. Providers like SquareTrade allow you to research and buy without pressure, for much lower prices usually.  You can also make more informed decisions – compare prices, read customer reviews, and understand what is actually covered by the contract.  Most of all, you have up to 30 days to decide if a warranty is right.

2. Are there any times or products that it may make sense for?

Warranties make the most sense when:

  • A warranty costs less than 15% of the item price, or less than 25% if it covers accidental damage.
  • If it’s a portable item that is prone to accidents, like cell phones, laptops, eReaders, and MP3 players.
  • The item is a heavy use device that is often on for hours at a time, like computers, TVs and game consoles.
  • Item has very high repair/replacement cost like a large flatscreen TV

3. Tell me a little bit about third party warranties and how they came to exist?

SquareTrade recognized consumers were paying too much for warranties and getting mediocre service. We realized there was an enormous opportunity to create a more sensible service with much greater consumer controls.

SquareTrade also saw a huge opportunity to use the internet to be more open to consumers vs. being opaque and hard to research like the status quo.

SquareTrade believes that warranties are no different from other products – but they are sold by stores in a way that makes it so that consumers don’t really have this knowledge. Therefore, the stores don’t have to offer competitive prices, nor do they have any incentive to deliver amazing service.

So SquareTrade built its whole service around allowing consumers to research and easily rate us (good or bad) for others to truly understand the real service experience. This is how consumers buy everything today, so why not warranties? The status quo has made research really hard as it exposes their service as dreadfully slow and hassle filled.

We also saw the internet as critical to do price research. And finally, we saw the internet as a better way to help consumers store, manage and find their warranties vs. losing the paperwork in a shoebox.

4. Who is the ideal client for your company? How can they know that will honor the policy?

Any consumer who has ever considered a warranty at the store should know about SquareTrade.  Anyone who does their research will see SquareTrade is both dramatically less expensive and much better service than the store warranty.

We believe in transparency and make it very easy for customers to review our service for others to see.  A customer can google “SquareTrade Reviews” and see what tens of thousands of other SquareTrade customers – who have experienced our claim service – have said about it.

You can read our reviews on sites like:

  • Reseller Ratings:  http://www.resellerratings.com/store/SquareTrade
  • NexTag:
  • Google Product Reviews: http://www.google.com/products/seller?zmi=squaretrade.com
  • iTunes App Store: http://itunes.apple.com/us/app/warranty-this-device-squaretrade/id340816768?mt=8

5. Are there any “buyer beware” that consumers should know about third party warranties?

Most warranties that you buy at the store are actually administered by third-party companies – they are just white-labeled by the store, so you think you are buying the store’s brand.  Consumers should be cautious when buying these warranties

3 things a consumer should ask about a warranty:

  1. Does it have a service guarantee? Most warranties don’t guarantee speed.  You may be without your laptop for 2 months while they track down a part.  SquareTrade has a 5-day service guarantee – if your item isn’t fixed, replaced, or reimbursed within 5 business days, we haven’t lived up to our standard of service and we will refund you the cost of your warranty.
  2. What kind of paperwork is required? Most warranties require tons of paperwork.  Some even required a notarized affidavit to file a claim.  SquareTrade requires zero paperwork – all of your information is stored online.  We even make it easy to store your proof of purchase online, so you never have to worry about digging up your item receipt.
  3. What is actually covered? Many warranties have hidden gotchas.  Some don’t cover shipping fees to the depot.  Some don’t cover failures from a power surge.  Best Buy’s accidental damage protection plan covers spills, but not full immersion – so if you’ve dropped your phone in the sink, you’re out of luck.  SquareTrade makes it very clear what is covered – including all of the above.

Bottom Line

We are warranties for the 21st century.  We make it extremely easy for customers to take care of their warranty online.  From the time of purchase, we make it easy to find what other customers are saying about SquareTrade – both the good and the bad.  We also help them compare prices so they know they’re getting the best deal.

We then make it easy to do everything online – store their receipt, file a claim, transfer their warranty, cancel their warranty, view their contract.  It’s all there, so there’s never any paperwork required.  Other extended warranties require significant paperwork to be dug up, some even require a notarized affidavit from a consumer to file a claim!

We are also the only warranty company with a 5-day service guarantee.  We don’t believe it’s reasonable for you to have to wait for more than 5 days for service.  If it takes more than 5 days, we will refund you the cost of your warranty in addition to your claim – we haven’t delivered on our promise of great service, so you shouldn’t have to pay for it.

Thanks for Steve for the interview! If you’re techy like myself, it won’t hurt to price shop SquareTrade vs. your other retailer.  I”m always about saving a few bucks here and there and I’m sure you are, too.

Facebook LinkedIn Twitter

About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion - educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.


Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University - Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® - Accredited Asset Management Specialist - and CRPC® - Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia's distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC's Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

Facebook Twitter LinkedIn

You Might Also Enjoy

High-Income Skills to Upgrade Your Career

High-Income Skills to Upgrade Your Career

How Much is Six Figures?

How Much is Six Figures?

<strong>$20 an Hour Is How Much a Year?</strong>

<strong>$20 an Hour Is How Much a Year?</strong>

Rich vs. Wealthy: What's the Difference?

Rich vs. Wealthy: What's the Difference?

Is It Better to Lease or Buy a Car?

Is It Better to Lease or Buy a Car?

Best Time To Buy A Car + Tips To Saving BIG When You Buy Your New Ride

Best Time To Buy A Car + Tips To Saving BIG When You Buy Your New Ride

2 Comments

  1. wentsen22 December 1, 2011

    Hi,

    Cell phone cases are a integral part of the cell phone accessory world.provide protection for your most prized high tech device. Protecting your mobile device is key to maintain the aesthetic appeal and to ensure a long lifespan. Constant drops and damage take a major toll on cell phones and lead to short lifespans causing you to purchase a new phone. We here at EliteXtreme carry a massive selection of cell phone cases made specifically for your cell phone and guaranteed to fit.

    Reply
  2. Sherrie March 20, 2011

    I appreciated viewing your site, it gave me some important infomation critical to my buying a warranty for my new Ipad, Thank you.

    Reply

Leave a Reply

Cancel reply

  • Make Money
  • Manage Money
  • Invest
  • Taxes
  • Insurance
  • Retirement
  • Banking
  • Home
  • Credit
  • Debt
  • About
  • Contact
  • Facebook LinkedIn Twitter

© 2023 Good Financial Cents®. All Rights Reserved. | Privacy Policy | Disclaimer

All written content on this site is for information purposes only. Opinions expressed herein are solely those of AWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

All third party trademarks, including logos and icons, referenced in this website, are the property of their respective owners. Unless otherwise indicated, the use of third party trademarks herein does not imply or indicate any relationship, sponsorship, or endorsement between Good Financial Cents® and the owners of those trademarks. Any reference in this website to third party trademarks is to identify the corresponding third party goods and/or services.

x
x