If you had told 20-year-old me that one day in the future I’d get really excited about buying a refrigerator, I would have doubled over laughing.
And yet, here I am.
My husband and I recently dropped a significant chunk of money on a new fridge, and it’s really rather odd how excited I am about a standard household appliance now that I’ve gotten older.
Then again, it does have French doors.
As we finalized the purchase and arranged delivery, the store asked if we wanted to pony up some extra cash for an extended protection plan to supplement the manufacturer warranty.
Since this wasn’t our first large appliance purchase, we knew this would come up during checkout. We did our research beforehand and went to the store armed with an answer.
Here’s what we learned — and the decision we made on whether or not to buy an extended protection plan.
What’s an Extended Protection Plan Anyway?
Extended protection plans are issued by the store selling the appliance and offer a wide range of benefits for over a period of several years.
In addition to 24/7 online support or covering the cost of parts and labor, some plans will even reimburse the cost of food spoilage or laundry services if your refrigerator or washing machine goes on the fritz.
Some protection plans also partially repay customers who don’t use the plan or allow customers to transfer coverage to a new owner if they sell an appliance covered under a protection plan.
An extended protection plan should not be confused with a manufacturer warranty. Manufacturer warranties come standard with most new appliances. They’re issued by the company that makes the product and are usually valid for one year to cover the costs associated with functional parts and labor.
A Look At the Numbers
To see what extended protection plans have to offer and which stores might have the best deal, I crunched some numbers to see if they’re worth it.
Here’s a look at extended protection plans from three nationwide stores that sell appliances, and what they have to offer.
(Note: Since some stores base the cost of an extended protection plan on the price of the appliance, I used the same refrigerator for all three examples.)
Best Buy Geek Squad Protection Plan
3-year: $124.99; 5-year: $199.99
Benefits:
- 24/7 phone and online support: No
- Food loss reimbursement: Up to $200
- Cost to transfer coverage to a new owner: Free
- Power surge protection: Yes
- Reimbursement on preventative maintenance parts: No
- Payback reward for not using plan: No
Read here for more details.
Home Depot Protection Plan
3-year: $125; 5-year: $200
Benefits:
- 24/7 phone and online support: Yes
- Food loss reimbursement: Up to $300
- Cost to transfer coverage to a new owner: Free
- Power surge protection: Yes
- Reimbursement on preventative maintenance parts: 25%
- Payback reward for not using plan: No
Read more about this protection plan.
Lowes Major Appliance Extended Protection Plan
3-year: $119.97; 5-year: $209.97
Benefits:
- 24/7 phone and online support: No
- Food loss reimbursement: Up to $300
- Cost to transfer coverage to a new owner: Free
- Power surge protection: Yes
- Reimbursement on preventative maintenance parts: 50%
- Payback reward for not using plan: Yes
Read more about this protection plan.
What Do the Experts Say?
Consumer Reports strongly discourages shoppers from buying extended service plans for major appliances. Its research shows most appliances don’t break down in the first few years and even when they do, repair costs aren’t that expensive.
“Save the money you’d otherwise spend on service plans,” recommends Consumer Reports. “Place it in a savings account, where you’ve socked away six months to a year of living expenses, or put it in a designated product repair/replacement fund. Then, when a product breaks, you’ll have the money to repair or replace it.”
Alternatives to Home Appliance Protection Plans
If you’re ready to skip the expense of an extended protection plan but don’t want to entirely fly by the seat of your pants and hope your appliance never breaks down, you’ve got some alternatives.
- Check your credit cards to see if any of them offer extended warranties as a standard benefit.
- Many used appliance stores offer warranties, so don’t be afraid to think outside the box (store) and check out what your local shops have in the way of pre-owned appliances.
- Do some research to find out the best time of the year to buy an appliance. New refrigerator models hit the stores in the summer, so May is a great time to score a deal on last year’s model.
The Decision We Made
In the end, we didn’t spring for the extended protection plan for our refrigerator. We decided to take our chances with the manufacturer warranty and also sock away a few bucks a month for unexpected repairs in case we chose poorly.
It makes more sense for us to park the money in an interest-bearing savings account to earn a bit of interest than to spend it upfront on an extended protection plan we may never use.
Plus, we like living on the edge.
Lisa McGreevy is a staff writer at The Penny Hoarder. She’s learned never to underestimate the excitement factor of French doors.
This was originally published on The Penny Hoarder, one of the largest personal finance websites. We help millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. In 2016, Inc. 500 ranked The Penny Hoarder as the No. 1 fastest-growing private media company in the U.S.
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