Money tip #132 – Don’t buy extended warranties

Extended warranties are huge money spinners so it's unsurprising that retailers are keen to push them onto consumers when they buy electrical goods in particular. The problem is that retailers often reward staff with pay incentives to shift these products so hard-sell tactics are therefore a direct consequence.

But most domestic products sold in the UK  come with a one-year guarantee anyway. Beyond this, you could still be entitled to a refund or free repair under the Sale of Goods Act, which states that goods must be of ‘satisfactory quality’ and last a ‘reasonable’ period of time.

In addition, not only might you be covered by your home insurance or by your credit card but extended warranties are often hideously expensive. According to This is Money the average policy costs £75, and the most expensive charges can add up to 50% of the cost of what you're buying.

Unsurprisingly the Office of Fair Trading has announced that it is launching a market study into extedned warranty sales.

Of course an extended warranty will save some people money but only once the standard 12 month warranty has expired. But given that most appliance manufacturer claim the lifespans of their products are in the region of seven years I'd rather take my chances than pay over the odds for expensive insurance.

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