Just say no to extended warranties

It's no surprise that appliance and electronics salespeople push extended warranties. Their stores make more percentagewise on the individual warranty sold than they make on the appliance. By one industry estimate, retailers make a 50 percent profit on any warranty they sell compared with less than a 10 percent profit on the appliance itself.

About one-fifth of major appliance shoppers in our recent survey succumbed to the extended-warranty sales pitch. As a result, they paid more than they anticipated on something they didn't need.

We have found that extended warranties aren't worth it for three main reasons:

• Appliances usually don't break during their warranty period, typically three years. For example, our appliance-repair-history data have shown that the likelihood your gas range will need repair in the first three years is less than one in five.
  
  
• When breakdowns occur within the extended-warranty period, the average cost of repairing the appliance is not much more than the average price paid for the warranty.
  
  
• Extended warranties often contain loopholes, such as not covering problems caused by normal wear and tear.
  
  

Given this history, Consumer Reports recommends against purchasing extended warranties for all major appliances.