Archive for the 'Ripoffs' Category

Extended warranty insanity

I haven’t posted in a while, but I am hoping to change that.

Anyway, today I was at Best Buy and I bought an inexpensive pair of JVC Gumy Headphones.  They were on sale (10% off) and I actually had a Reward Zone coupon worth $10, so they were actually “free to me”.  I bought these locally instead of online because I needed them tomorrow and I wanted to physically see the options.

Why did I buy such a cheap pair of headphones?

  • I already own a really good pair of headphones that I love.
  • Ear bud headphones tend to get a lot of abuse and break.
  • Most ear buds are the same, so why pay more for them.
  • I have a friend that bought a $200 pair of Monster ear buds and he is on his 6th pair (the previous 5 had broken).

So here I am buying a cheap pair of headphones for “free” with my coupon and the guy behind the counter proudly (seriously) offered me a 2-year extended warranty plan.  The guy really thought it was a good deal, because “we replace these things on the spot, no questions asked for up to 2 years”.  Now, it is well documented on the Internets [sic] that these extended warranty plans are really nothing more than overpriced insurance and major money makers for the likes of Best Buy and others.  But this particular deal wasn’t just bad it was obscene.   The price of this “warranty” was $5.  That is not a typo, it was 50% of the purchase price.  If it cost me 50% of the value of my car to insurance it for 2 years, nobody would ever do it.  So while it should be obvious, let’s breakdown just how bad of a deal this is:

  1. The “warranty” is for 2 years, but the earphones come with a 1 year manufacture warranty, so I am really only buying a single year of “protection”.
  2. I don’t know exactly, but the failure rate for most consumer electronics is less than 10% in the first two years and picks up to 20-30% in years 3 and 4 (after the warranty period is over).  Using this math, on average… you have only a 1 in 10 chance of making use of this insurance, but the cost priced in a 1 in 2 chance.  I would have MUCH better odds, betting my $5 on a single hand of Blackjack.

I believe the live within your means tip here is to not over pay for insurance and not to buy insurance you don’t need.  Pocket the money instead and be your own insurance company.

Cheers.

This posting is provided “AS IS” with no warranties, and confers no rights.

It costs a lot to be lazy…

We just got back from a trip to wonderful Waikiki Beach in Honolulu, HI. It was a lot of fun all around and I would definitely recommend the trip. Of course, I took maximum advantage of Visa’s 25% off Hilton stay promotion, discount coupon + bonus miles at the off site airport parking, as well as saver fares and free upgrades on Alaska Airlines. I used the money I “saved” on a nice dinner, a trip to the spa (20% off course), surfing lessons, snorkeling, SCUBA diving (10% off) and overpriced drinks by the pool.

One thing I did NOT spend my money on was room service. Here’s the story – It was about 9PM and I had a craving for something sweet. I flip open my room service catalog and turned to the dessert section. There I found an array of highly priced items such as ice cream, cookies and pie… all ranging from $9 to $18 in price. Deciding I could “splurge” on the $10 bowl of ice cream, I proceeded to read the fine print. There I found that “all room service orders are subject to a 18% service charge and a $6 delivery charge”. WOW!

This means my $10 bowl of ice cream was actually going to cost me $10 + 18% + $6 or $17.80. Who on earth pays these prices? Let’s break it down:

  • The “raw” ice cream probably costs about $1 (Being generous here)
  • The service, cart, bowl and staff to deliver this probably costs $4 (Being generous here)
  • Let’s say that by default the hotel wants to make $5 profit (!)
  • Now slap on $1.80 in “service charges” – which if it is like the Spa is split between the house and the staff.
  • Now slap on $6 in “delivery charges” – This is the killer to me, room service by definition is delivered and is why the ice cream costs $10 instead of $5. Adding on this additional fee is just plan greedy IMO.

Anyway, I decided to take the elevator down and walk about 4 minutes to the local ice cream parlor where I had a waffle cone and two scoops for $7.