GMR 179: Product Extended Warranties - Are They Worth the Cost?

It seems like every item you’re purchasing these days offers an extended warranty. From Amazon to eBay to your local Walmart purchase, you can’t get through a purchase without an offer for an extended warranty. When is an extended warranty needed, and are they worth the value you’re being asked to pay for them? In this episode of GMR, we’re digging into this topic to help you make better decisions and get the best value for your money.

Product Warranties

• Walmart

• Amazon

• Cars

• Furniture

• TVs

• Tools

Are product warranties a good value?

• Most of the time it’s not necessary unless you’re buying poor-quality items.

• Profit margin is about 50% on these products.

  • The store keeps 50% of the cost of the warranty.

  • The other 50% actually pays for the insurance on the product.

  • In traditional insurance, the profit margin is 2%-4% normally, not 50%.

Ways to avoid the extra cost of warranties and still be protected

1. Save cash each month for replacement/repair item if it breaks - almost always the cheapest option.

2. Purchase better-quality products that have a good warranty and great reviews.

3. If you have a credit card, review which cards have a built-in product protection benefit.

   1. Many add an extended warranty to your purchases.

   2. Some will cover lost/stolen phones and other similar perks.

Resources

Budgeting tools and other free resources - https://leosabo.com/resources
David’s website - www.stewardshippastors.com