You buy some high-end television or smartphone after mulling it over for weeks, and then you have about 15 seconds to consider buying what amounts to an overpriced insurance policy on it.
When prompted, do you usually sign up for an extended warranty?
Many do, of course, even though consumer experts have long recommended against buying extended warranties, a high-margin profit centre for retailers.
Most products don't break down within the warranty period and even when they do, repair fees generally end up costing the same as money you shelled out, they maintain.
As well, sales staff regularly mislead customers when they sell extended warranties, according to a recent BBC report. And, if these folks are to be believed, the same thing happens on this side of the ocean.
Truth is, buying a warranty his isn't really a financial decision at all -- it's about regret, which is a very uncomfortable feeling that we all try to avoid, says Dan Ariely, author of Predictably Irrational.
And because we want to prevent that feeling, we're all too willing to do something that's actually not that financially wise. Most of us simply want to know that we won't have to worry about this down the road. And as a consequence, we often pay too much money for that solace, he maintains.
If you're the type that might sleep easier thanks to the additional peace of mind an extended warranty might offer, go right ahead. But at least understand why, he suggests.
Do you generally buy extended warranties? Using what criteria? How have things worked
If you’re like me it isn’t always easy trying to save money.
It seems whenever I put a little money away into a savings account or a secret stash at home some unexpected expense always seems to arise. Car repairs, home repairs and uncovered medical expenses can pop up at any time. Begrudgingly, I am forced to dig into what little savings I have or choose to add onto my already pumped up credit cards.
But I am optimistic. According to a new report from BMO Bank of Montreal, Canadians are planning to save on average about $9,859 this year. That’s an increase of $600 over the previous year.
And how do they intend to save? Well, the majority are using a Registered Retirement Savings Plan (RRSP), 63 per cent; chequing account, 57 per cent; Tax Free Savings Account (TFSA), 49 per cent; high-interest savings account, 29 per cent; and Guaranteed Investment Certificates (GICs), 25 per cent.
Ernie Johannson, Senior Vice President, Personal Banking, BMO, says it’s encouraging to see Canadians increasing their savings this year. While it's important to pay down debt - particularly high-interest debt - it's essential that households build themselves a financial cushion as well, whether it be for retirement or other goals.
And just what are Canadians saving for? Well, the report, conducted by Pollara, indicates the majority are saving for vacations and for purchasing luxury items, entertainment and hobbies. Retirement and emergency savings tied for second spot.
Other top things Canadians are saving for include home renovations (29 per cent); new vehicle (20 per cent); education (19 per cent); and a new home (15 per cent).
The report also found that men plan on saving a little bit more than their counterparts by hoping to stash away $11,631 compared to the ladies with $8,091.
And by province it appears that Albertans plan on saving the most with $18,035; followed by British Columbia, $11,109; Ontario, $10,465; Manitoba and Saskatchewan, $9702; Atlantic provinces, $6,698; and Quebec, $5,477.
It’s always nice to be able to put a little away for a rainy day however, the study found that only half of Canadians polled feel they are saving enough to meet their goals.
Some of the barriers to increased savings include high expenses (71 per cent); low income (65 per cent); and debt repayment (52 per cent). Now I can relate to that!
Check out the full report here.Will you be saving money this