Just about everyone loves a good deal. But if you’re not careful, it can be easy to fall for something that sounds like a bargain, but may not be in the long run.
Here are seven situations where the deal may not be as great as the seller wants you to think it is.
1. Online Price Cuts
When shopping online, it’s common to find products that have “slashed” prices. But just because the list price is much higher, it doesn’t mean that you’re getting a steal. In fact, the seller may never have sold it at that price.
For example, if a television you’re interested in is selling at a “discount” for $200 on Amazon, with a list price of $300, that may look like a deep discount. But if you check CamelCamelCamel, a website that tracks Amazon prices, you may see that the highest price the TV has ever sold for on that site is $225. Just because the ticket price is listed at $300 doesn’t mean the product truly sells at that price.
If you’re thinking about making a large purchase online because the website makes it seem like a good deal, do some sleuthing and compare other websites to see if it’s actually a good deal. Also, use websites like CamelCamelCamel to get an idea of historical prices. Depending on the pattern, you may end up saving more if you wait, or buy from another retailer.
2. Free Shipping
Many online retailers charge for shipping unless you spend a certain amount on items.
According to a study by BigCommerce, 84% of global consumers have added items to their cart solely to obtain free shipping. Three in 10 online shoppers say they always increase the size of their cart if it can qualify them for free shipping.
But adding more items to your cart, particularly ones you wouldn’t have bought otherwise, may ultimately cost you more than paying for shipping.
3. Store Credit Cards
Most in-store shoppers have been asked by a cashier if they’d like to sign up for the retailer’s branded credit card. In many cases, there’s an offer to get a discount on your next purchase, or even the current one.
But these deals are generally very poor, especially compared to top rewards credit cards that offer sign-up bonuses worth hundreds of dollars in cash back, points or miles.
What’s more, a lot of store credit cards offer low credit limits, charge high interest rates and only allow you to use them with that particular retailer. They can also encourage you to spend more by offering ongoing discounts and access to exclusive sales.
Unless you regularly shop at a specific retailer and have a good handle on your spending, it’s best to avoid store credit cards.
4. Pre-Bagged or Cut Fruits and Vegetables
Americans are often willing to pay a pretty penny for convenience, but that’s generally not worth it when it comes to your fruits and vegetables. Where an ear of corn may cost you a quarter, you may be asked to pay $1 or more for one that’s already shucked.
Many grocery stores also have areas where you can buy pre-cut fruits and vegetables. While it can save you some time, think about how long it actually takes to chop a cucumber into slices or to spiralize a zucchini — in many cases, you may be paying more for a simple task that can be completed at home in minutes.
And if you’re worried about how long it takes to slice fruits and vegetables for specific meals, consider doing it all at once as soon as you get home from the grocery store, so they’re ready to go when you’re making a meal.
5. Extended Car Warranties
If you’re buying a new vehicle, you’ll typically receive a warranty as part of the purchase. But if you’re buying used, the salesperson or finance manager may try to sell you an extended warranty.
This is because dealerships typically make big profits on service contracts. According to Motor1.com, they pocket up to half the amount you pay.
And why is that? Because extended warranties are very restrictive on what they’ll cover, so most vehicle owners can’t cash in. And if you do end up using it, the cost of the repairs are often less than what you paid for the warranty.
Finally, the cost of warranties and other add-ons is typically rolled into the auto loan, which means you’re paying interest on it.
If you’re planning to buy an extended warranty for a used car, it may be wise to wait until after you buy the car and shop around for one – or simply put that money into an emergency fund for repairs.
Note that this can also apply to extended warranties on other products. If the terms have a lot of limitations and you can afford to replace the item, consider skipping the warranty.
6. Buy X, Get One Free
Retailers often encourage customers to buy more of a certain product by promising a free one if they buy a certain amount.
For example, you may see a promotion that says you can get a free can of soup if you buy 10, or a free 12-pack of soda if you buy five.
These deals can be beneficial if you know that you’re going to use all of them anyway. If you or your kids love ramen or macaroni and cheese, buying more now will simply save you a future trip to the grocery store, plus you’ll get one for free.
But if you’re buying a product that’s perishable or something you may not use, you may end up spending more unnecessarily.
7. Bulk Discounts
Wholesale clubs like Costco and Sam’s Club promise lower per-unit prices in exchange for buying items in bulk. While there’s nothing inherently wrong with that arrangement, especially if you consume the product regularly, buying in bulk doesn’t always save you money.
For example, you may enjoy a lower per-unit cost by buying a large pack of yogurt once compared to buying several individual cups. But if you don’t eat the entire pack before the cups expire, you may not have saved any money at all.
If you’re considering buying items in bulk, especially perishable food items, make sure that you’ll be able to use them all to avoid overspending.
The Bottom Line
Getting a great deal can make you feel like you’re making good financial decisions, and there are countless deals that are absolutely worth it. But there are also deals that aren’t as great as they seem.
If you’re thinking about making a purchase to save some money, take a step back and consider how much you’ll actually save. Taking the time to think critically about your purchases can prevent you from overspending and help you get more for your money in the long run.
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Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.