Extended Warranties: When To Buy, When NOT To Buy

To make up for sluggish sales in this sagging economy, retailers are expected to hammer customers heavily this holiday season with extended warranty offers.

In years past, Best Buy has made a half-billion dollars A YEAR in sales of extended warranties ALONE.

But these service plans are not always a good deal. Here's what Atlanta-based consumer advocate Clark Howard (www.clarkhoward.com) says you should follow:

* NEVER BUY FOR COMPUTERS, VCR'S, DVD PLAYERS. Howard says these electronics depreciate so fast, it'd be cheaper to buy a new one than to pay for a warranty to fix it.

* NEVER BUY FOR KITCHEN APPLIANCES. Howard says only 12 to 20 percent of the money spent on extended warranties for appliances is ever used to make a repair.

* FOR CARS, DO NOT BUY "THIRD-PARTY" WARRANTIES. Buy only the manufacturer's extended warranty or one sold by your insurance company, and even then, make sure it kicks in after the initial 3 years/36,000 mile FREE warranty expires.