Best Buy 'Buy Back' Insurance Hopes to Lure Early-Adopters for Tech Trade-Ins
Plans promise to "future-proof" purchases, but you pay a price for convenience.
Feb. 10, 2011— -- Every time you purchase a laptop, cell phone, or other gadget, the toughest question may be, "Should I buy now or wait?"
For consumers, there's nothing more frustrating than having a tech purchase rendered obsolete by a newer model just a few months later, and these days, it seems as if new technology is coming out faster than ever before. This week, rumors have swirled that Apple may release not only an iPad 2 this year but possibly even an iPad 3.
"You buy something, you're excited about it, six months later it's out of date," lamented one shopper outside a New York City Apple store today.
To counter these frustrations, some retailers are offering a new type of insurance policy. Best Buy's version, called "Buy Back," offers up to fifty percent of the retail price back when you trade in a used mobile phone, television or laptop.
Best Buy launched the service this week with a glitzy Super Bowl ad featuring pop stars Justin Bieber and Ozzie Osborne.
Crunching the Numbers on 'Buy Back' Value
The service sounds like a great deal for consumers, but is it? We looked at the fine print today -- all 3,665 words of it -- and crunched the numbers ourselves.
Just to sign up for Best Buy's plan will cost $70 for laptops, up to $60 for mobile phones and up to $350 for televisions. The plan promises money back to put toward a new gadget, but the amount you receive, in the form of a Best Buy gift card, decreases the longer you keep the product.
For example, if you buy a $2,500 TV and pay $350 for the Buy Back plan, if you wait any longer than two years, you get back only $250. That amount doesn't even cover the cost of the policy, but Best Buy still gets your used TV.
Are 'Buy Back' Insurance Plans a Good Deal?
If you buy a $600 iPad with a Buy Back plan for $70 and you want to upgrade after a year-and-a-half, you get back a total of just $120 to put towards a new device.
The contract also indicates that the trade-in value depends on the condition of the item. A grade will be given for products from "Good" to "Substantially Impaired," and the buy-back value will be adjusted accordingly.
Best Buy Defends Service
Today, Best Buy defended the value of its service.
"It's not a scam at all," said Best Buy spokeswoman Amita Persaud. "I think it's more geared toward people who want to stay on top of every product coming out, essentially every six months."
But others think the best way to stay ahead is simply by reselling your old gadgets and using the cash for new ones. Six-month-old $500 iPhones now sell for over $300 on eBay, but Best Buy offers only $200 back for a similar product, not even factoring in the cost of the policy.
"You can get a better deal by selling your phone on eBay or Craigslist," said Gary Merson of HD Guru.