Is It Better to Have a Savings Account for When You Break Your Phone?
In the Wall Street Journal, Geoffrey Fowler writes that gadget warranties aren’t worth it most of the time (unless you’re accident prone), and that you’d be better off putting the money you’re spending on warranties into a dedicated savings account and using that money to fix or replace your device if you’ve cracked a screen or dropped it in a toilet.
Extended gadget warranties are only worth it for niche cases, like people with an extremely advanced case of klutziness. Programs like AppleCare can also be helpful to those who need always-on-call phone tech support, beyond the great free service Apple offers.
Yet for most of us, here’s a better plan from Richard Thaler, a renowned economist at the University of Chicago Booth School of Business: “Every time someone offers to sell you insurance on a non-large purchase say no, and take that money and put it into a rainy-day account. With any luck, there will be plenty of money in that account the next time you drop your iPhone.”
Or, take the money and buy yourself a nice protective case.
I switched from a flip-phone to an iPhone in 2012, and have been steadily making $10-a-month payments for phone insurance. I’ve been fortunate to have never used it despite dropping my phone a handful of times (inevitable). If I had put that money into savings instead, I would have more than $400 in that account, enough to replace a phone entirely, but it’s easy to say this in hindsight. What if my screen had shattered after dropping it one of those handful of times? I guess I’m one of those people who is willing to pay a small amount of money every month to feel like I’m protected in some sort of capacity.
If I took anything away from the Journal piece, it’s that I should shop around for better insurance. A company called iCracked, for example, offers an insurance plan for $7 a month, plus will send a technician directly to your home or office for $25 to fix your device right there in front of you. I’m going to switch to this plan and put the $3 I’m no longer spending on insurance into a savings account. Hey, every little bit helps!