You’ve heard it at the register a hundred times: “Would you like to protect that?”
I’ve been reporting on consumer money since 1991, and I’ll tell you what that question really is. It’s one of the most profitable sentences in retail.
Want proof? Look at Lowe’s. In the nine months that ended Oct. 31, 2025, the home improvement chain recognized $430 million in protection plan revenue and paid $182 million in claims, according to its quarterly filing with the Securities and Exchange Commission.
That’s about 42 cents in claims for every dollar customers paid, before overhead. The other 58 cents didn’t go to fixing anybody’s washer.
Consumer Reports has been saying the same thing for years. Stores keep 50% or more of what they charge for these contracts, according to its buying guide.
Its analysis found that extended warranties on large appliances averaged $126. People who skipped the plan and paid for repairs spent only about $26 more than the warranty cost, says Consumer Reports. And about 1 in 5 people who used a plan weren’t happy with the repair.
Repairs made under a plan also tended to fare worse. In Consumer Reports’ survey, 17% of plan repairs came with unreasonable delays, versus 9% of repairs people paid for themselves.
So why do we keep buying them? Because the pitch comes at the exact moment you’ve just spent a lot of money and you’re nervous about losing it. That’s not an accident.
Here are five better ways to protect yourself.
1. Read the warranty you already have
Nearly everything you buy new already comes with a manufacturer’s warranty. An extended plan isn’t a good value if it doesn’t give you more coverage than that, the Federal Trade Commission says. Often, the first year of a store plan simply overlaps the protection you already have.
And don’t let anyone scare you into thinking a repair shop will void your warranty. Under federal law, a company can’t void your warranty or deny coverage just because you used a part made by someone else, the FTC has warned manufacturers.
In 2024, the FTC sent warning letters to eight more companies over warranty terms. Samuel Levine, then director of the FTC’s Bureau of Consumer Protection, said “restricting consumers’ right to repair violates the law,” the agency’s announcement says.
2. Check your credit card first
Some credit cards extend the manufacturer’s warranty for free when you use them to pay.
Chase’s Sapphire cards, for example, add a year to U.S. manufacturer warranties of three years or less, up to $10,000 per item. American Express adds up to one year to manufacturer warranties of five years or less on eligible cards, according to its benefit terms.
But card benefits change, and some issuers have cut this one. Check your card’s benefit guide before you count on it.
If your current card doesn’t offer this protection, you can shop for a card that does in our Solutions Center.
3. Buy where the protection comes free
Some retailers build extra coverage into the price. Costco, for example, covers every TV it sells for up to two years, compared with the one-year industry standard, and gives members 90 days to return a TV. It also offers free tech support.
For more, see “5 Costco Purchases That Come With Free Extended Warranties” and “8 Little-Known Benefits of Buying Appliances at Costco.”
Some companies stand behind their products for life. See “53 Companies That Offer Lifetime Warranties on Products.”
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4. Be your own insurance company
Here’s the move that flips the math in your favor. Every time you’d have bought an extended warranty, put that money in a savings account instead. The FTC suggests the same idea.
Think about what the store is doing: Collecting your money, paying out less than half in claims and keeping the rest. When you self-insure, you’re the one keeping the rest.
Buy a $126 plan on each of four big appliances, and you’ve spent $504. Put that in savings instead, and it’s there for whichever machine breaks, while the other three keep humming along. Sears Home Services says the average costs for most appliance repairs run about $150 to $320.
If you’re building that fund, you can compare savings account rates in our Solutions Center, so it earns something while it waits.
5. If you buy one anyway, read it first
Sometimes a plan makes sense, like when you’re buying something notoriously fragile or a repair would wreck your budget. If you go that route, the FTC’s checklist is a good one:
- Who backs it: Find out who pays the claims, and check that company’s complaint record.
- What it costs: Look for deductibles, shipping costs, transfer fees and limits on what it pays.
- What’s covered: “If it isn’t listed in the contract, assume that it’s not covered,” the FTC says.
- How claims work: Find out whether you have to ship the item, wait for approval or use a specific shop.
And never buy one from a caller who reaches out to you out of the blue. The FTC warns consumers to be wary of unsolicited sales pitches for these contracts.
The bottom line
The store isn’t offering you peace of mind. It’s selling you a product that makes it a lot of money, precisely because it usually doesn’t pay off for you.
Say no thanks, use the protection you already have, and put the savings where they’ll do you some good. For more on this, see “Ask Stacy: Are Service Plans and Extended Warranties Worth It?“
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