Not every holiday sale or promotion is a good deal. But how do you know what to look out for when shopping? By learning how to spot these red flags, you can make smarter financial decisions and avoid overspending.
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Here are four financial red flags to be aware of in holiday sales and promotions.
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Some retailers will inflate the prices of particular items before marking them down to create an illusion of savings. “Holiday sales can be full of surprises,” said Fameez Haroon, shopping expert and co-founder of OTAA. “Not every discount signs are good, in fact, some of them should be ignored.”
Haroon recommends comparing the sale price across other stores or using online price trackers.
“There are Chrome extensions such as CamelCamelCamel or Honey that are able to record the sales relative to the time on an item through Amazon and others. The sale prices then are compared with the prices of the same items in the previous month and if the price is actually a sale price or not,” he said.
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Another common tactic is the bait-and-switch. “[Retailers] offer fantastic deals but when you go to buy, the item is either out of stock or there is limited quantity available,” Haroon said.
Often, what remains is either a low-quality option or a more expensive alternative. To avoid falling victim to this strategy, Haroon recommended that “consumers check stock levels and any alternatives available in the store.”
“Buy more, save more promotions” — like buy one, get one free (BOGO), spending more to get a “free” gift, or meeting a certain dollar amount to get free shipping or a coupon or discount code — are typically worth it when you plan to purchase multiple items.
While it’s not illegal, it’s considered a form of psychological manipulation.
“Retailers have always known this trick, and they’re really good at what they do,” said Rachel Cruze, finance expert, on CBS MoneyWatch. “They know that if we put a sale on or offer free shipping if you spend ‘X’ amount, you’ll spend more money.”
While shopping, Haroon recommends making rough estimates to determine whether the purchase is ultimately worth it. Another way to avoid spending more money is to make a list and stick to it.
Countdown times or phrases like “Only five left!” are used to create a sense of urgency while shopping online.
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