(USA TODAY) Chances are you have either purchased an extended warranty or service plan in the past or have been tempted by a savvy salesperson to pull the trigger on one. They are available for just about anything we buy these days - from a new flat-screen TV, to laptops, smartphones, appliances and the list goes on.
Extended warranties are insurance for whatever you're buying. The service plan provider is betting you won't have to use it, and frankly, you're hoping the same thing.
But are they worth it - or will what you spend be money down the drain?
First, consider the manufacturer's warranty. While factory warranties do vary, most offer a year on parts and three months on labor. Some manufactures will throw in a full year on labor, too.
Retailers often push hard to get you to buy extended service plans. Why? Because they're cash cows and have a much higher profit margin than they make on the actual products.
So, are they worth the extra cost? According to data from Consumer Reports, products seldom break within the extended-warranty window - after the standard warranty has expired but within the typical two to three years of purchase. And, in most cases, out-of-pocket repairs do not cost much more on average than an extended warranty.
One way to up the odds that your purchase will stand the test of time is to do your homework before you buy. Sure, that off-brand TV or tablet may seem like a great bargain, but you're probably better off buying from manufacturers whose products are reliable in the first place - big brands you know and trust.
How you pay for whatever you're buying could be just as important as the brand or product you select. Many major credit cards offer extended-warranty coverage at no extra charge. These types of perks typically lengthen the original manufacturer's warranty by as much as one year.
Still, if you're someone who finds peace of mind in buying an extended warranty, there are some things to consider. Negotiate and shop around if you do want extra protection.
Keep in mind an extended warranty usually begins the day you purchase a product, so it overlaps with the standard warranty for a year.
As a rule of thumb, never pay more than 20% of the purchase price of the product for an extended warranty. And don't be shy when it comes to trying to negotiate your way to a better price.
Another strategy for getting a better deal on an extended service contract is to seek out top-rated warranty plan providers like SquareTrade and Protect Your Bubble. These third-party providers offer protection usually at lower prices than store-brand service plans.
No matter where you buy your extended warranty, always be sure to read the fine print. Know what's covered and what's not, and keep in mind how you intend to use the product. If it's a digital camera or smartphone you'll be traveling with or using 150 times a day, a plan that covers accidental damage make sense and may be worth the extra money.
Regina Lewis is a national television contributor and host of USA TODAY's "Money Quick Tips" videos. Follow her on Twitter: @ReginaLewis.