Why extended warranties are usually a bad deal for consumers
By
Kevin Brasler
Summary
Extended warranties and protection plans are highly profitable for retailers but poor value for consumers. Research from Consumers' Checkbook shows these plans prey on loss-aversion psychology, where consumers fear product failure more than the cost of repairs or replacement. The article advises consumers to skip these plans in most cases, as the money spent on warranties often exceeds the cost of occasional repairs or replacements.
Source
bskyWhy extended warranties are usually a bad deal for consumersinquirer.comKey quotes
· 4 pulledThese plans are enormously profitable for the companies that sell them but usually terrible deals for consumers, according to research from Consumers' Checkbook.
To sell these policies, retailers prey on our 'loss-aversion' tendencies.
Most consumers worry more about having a product fail than they do about the cost to replace it or pay for repairs.
For some reason, losing $100 feels far more painful than spending $100.
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