Best Buy's Buyback Program Not A Good Deal

Best Buy recently launched a buyback program where you pay them a fee up front and they will buy your rapidly depreciating technology back from you at a set price in the future. Like extended warranties, you are better off passing on it. Companies don't sell products like this because it is such a good deal for the consumer.Nothing except perhaps a car depreciates faster than technology once you purchase it, but unlike a car, technology can waste away into worthlessness within just a few years. You might be tempted to look at a program Best Buy has rolled out that will allow you to "sell" your tired old device back to them at 10 percent to 50 percent of the original value, depending on how long you hang on to it. This might look particularly appealing to early adopters that want the latest phone, tablet or other portable technology.

You are probably better off just selling it on eBay or Craig's List though. You'll generally come out ahead once you factor in the auction price you get and the fees you save buy not buying the buyback program.

Digital Trends did a study on how the program works. Let's take an iPad as an example. Best Buy sells the 32GB WiFi model for $599.99. You'll pay $69.99 for the buyback protection plan. Let's say you keep it nine months and want to upgrade later. Best Buy will buy it back for 40 percent of the original value, or $240. Your total loss on the deal is $429.98, which is the $359.99 difference in price and the $69.99 for the privilege of the service. I am excluding taxes and shipping because you'll lose that no matter what.

Note too that with the Best Buy program, your device has to be in good working order and all original documentation and cables must come with it. If any of that is missing, you get nothing. The penalty for that on eBay or other site is a lower price. With Best Buy, you don't get cash. You get paid in a Best Buy gift certificate so your new purchase has to be with them, where they make another chunk of profit off of the replacement sale.

What if you sold it on eBay? A quick look at auctions within hours of closing on eBay shows used iPads of identical configuration going today for between $300 and $425. Let's be conservative and say you only get $325 for your device. Your total loss would be $274.99, which is the original price less the $325. You'll save about $155 by selling it yourself, and perhaps more if your auction creeps up towards the $400 mark. You'll lose a few bucks more on fees paid to eBay, but you can circumvent that by using Craig's List if desired.

Of course, you run the risk of selling it for less, but the price would have to dip below $170 before Best Buy's plan came out on top.

Digital Trends looks at a phone, tablet, laptop and a big screen LCD TV. In every case, selling the item yourself put you hundreds of dollars ahead. Like extended warranties, when the cashier asks you about the buyback program, just smile, politely nod and say "no thanks."