Did you ever wonder why electronics store employees spend lots of time trying to talk you into purchasing an extended warranty for your product? They'll say it's for your protection.

The truth is that extended warranties make the electronics stores tons of money – they profit to the tune of 40% to 80% on the warranties. And when there's a big money winner, there's always a loser. In this case, the consumers lose almost every time.

Extended warranties make companies a lot of money because consumers never need them, or if they do, loopholes exclude coverage. So while the salesperson is extolling the virtues of a plan that will cover the repair or replacement cost of your electronic equipment, the fact remains that it's an unnecessary expenditure.Having coverage under and extended warranty makes us feel good. It makes us feel like we're protected if our expensive item malfunctions. But with all the exclusions and hassles consumers are faced with, they most often don't even recover the cost of the warranty.

So take your chances and save your money – don't buy an extended warranty. You'd be much better off taking the money you would have spent on the warranty and putting it in a savings account. That way, you'll have the money if you need to repair the item within the first few years of owning it. And if, like most consumers, your electronic equipment doesn't need a repair, you have just saved yourself a tidy little sum.

Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.

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