My wife may shoot me when I say this because I have a history of buying the latest technological gadget, but buy back insurance is a waste of money in most cases.
I am a gadget fiend. I love gadgets. I own a lot of them. But, I hate wasting money even more than I love gadgets. And, buy back insurance is a waste of money like buying an extended warranty.
What Is Buy Back Insurance?
Recently retailers have been offering buy back insurance plans which will guarantee a consumer a certain amount of money if they choose to sell their old electronics back to the store. This type of insurance protects consumers when technology rapidly changes or advances.
Recently, Apple released the iPad2 with a lot of fanfare. And, not too long afterwards, there have been rumblings of an iPad3 release not too far off in the distant future.
While the iPad3 is not slated to be a complete revamping of the previous model like the jump from the original to the iPad2 was, the news of a new iPad has made owners who recently bought the newest version a little uneasy about a faster, cheaper product
Why Is Buy Back Insurance A Waste Of Money?
Technology is always changing. Gadgets, computers, cell phones, and the like are always being upgraded. You cannot stop or fight the changing technology market. You cannot even hope to keep up with it.
There was a time when the speed of computing was doubling every 18 months. It was a dizzying race to try and keep up with the new technology and have the greatest piece of computing power sitting on your desk. As soon as consumers got used to their new machines, another one dwarfed it with a jump in increased computing power.
The same revolution can often be seen in technology now with rapid gains in efficiency and reduction in physical size. Many consumers choose to wait for the next great “thing” to come along, but the problem with that philosophy is that you may find yourself continuing to wait because the next great thing is always right around the corner.
An Example Of How Buy Back Insurance Makes Bad Financial Sense
There are many buy back programs that are being offered by electronic retail stores lately. One popular program requires you to pay a fee to sign up for the buy back plan.
For example, after you purchase an item, you pay a fee to give you the right to sell back your electronic gadget back to the store. This popular plan requires an upfront cost of $70 for laptops, $350 for flat screen televisions, and $60 for cell phones.
If you purchase an expensive television and keep it for two years, the plan would only give you $250 back in return which would not even cover your costs for entering the buy back plan. And, if you do sell your gadget back to the store at rock bottom prices, those outlets can then in turn resell them for a second time earning back more of their money.
Buy Back Insurance Is Very Similar To Extended Warranties
Buy back insurance is very similar to buying extended warranties. In most cases, the only people who benefit from an extended warranty are the store owners. The likelihood of a consumer being able to collect on an extended warranty is very low. That is one reason why they are relatively cheap to purchase. These extended warranties and buy back insurance plans simply add to a company’s bottom line more often than not.
So, what is a lover of technology and gadgetry to do? My advice is to buy the electronics that you want when you want them. Do not wait to purchase something just because you think that something better is right around the corner. It is like a couple who decide to wait to have a baby until they can afford it. If you keep waiting until you can afford one, you will never be a parent.
The same is true with electronics. You simply cannot keep waiting, and purchasing buy back insurance may not be a cost effective plan either. Read the fine print and determine what is best for you while continuing to remember that retailers are always looking out for their bottom line often at your expense.