Get one free for every purchase! Pay more to get free shipping! Save 10% with this special discount code! These are the kinds of sales pitches that consumers find irresistible. But spending money to save money, a practice that has come to be called “frugality,” rarely benefits consumers. Instead, retailers' clever marketing strategies often convince consumers that they're getting a deal when it's just a waste of money.
In short, buyer beware, experts warn.
“We understand the appeal of going to checkout and having a notification pop up telling you to spend an extra $10 to get a reward,” Jacob Channell, senior economist at LendingTree, told CBS MoneyWatch. “But 90% of the time, when you break it down, it doesn't make sense. If you're spending more money, you're not actually saving money.”
what will you do?
Many common marketing offers dangle the lure of savings, conditional on putting down enough cash. They include:
- Get a “free” gift when you spend over a certain amount
- Pay enough to qualify for free shipping
- buy 1 get 1
- Purchase additional items to use coupons and discount codes
- Register for the service to receive a discount
If these tactics sound familiar, it's because they're widely used by a variety of retailers, from grocery chains to clothing stores, says Ted Rothman, a personal finance expert at Bankrate.
Indeed, there is nothing illegal in such an offer, not even particularly illegal. After all, while sellers are in the business of making money, consumers have some responsibility for determining whether a transaction is worth it.
Similarly, shoppers should be wary of sales tricks that subtly induce overspending.
“Retailers have always known this trick, and they're very good at it,” personal finance expert Rachel Crews told CBS MoneyWatch. “They know that if they have a sale or offer free shipping if they spend X amount, they will spend more money. Psychologically, they tempt people to I’m good at knowing how.”
Why shoppers are drawn to it
But why do consumers fall into the trap of spending more in the name of saving money? Money coach Nicole Victoria told CBS MoneyWatch that part of it is FOMO, or limited-time sales and other bargains. He said this is often due to fear of missing out on the product.
“It's about loss aversion, the perception of loss,” she told CBS MoneyWatch. “I feel like I'm losing money by paying for shipping, and I've invested time and resources to fill her shopping cart, so I wish I could get something more out of it.”
Of course, saving money isn't always a mistake. Sometimes it makes financial sense to spend more money on something you were already planning to buy, and it can lead to real savings. But Victoria said if, for example, you buy a large quantity of perishable food that you can't consume before it expires or spoils, it can be a complete waste.
“It's not all bad, but what's more harmful is impulse buying, low-quality products, examples of fast fashion and things you don't necessarily need. Buying in bulk is not a good idea if you're going to waste it.” Throw away leftovers. '' Rossman said.
On the other hand, he added, with annual interest rates hovering near record highs these days, saving money can lead to building up credit card debt.
How to avoid savings
Experts say it's generally wise to ignore deals that end up costing you more than you planned.
“In some cases, it's better to ignore the notification and just buy what you originally intended to buy. It's important not to get distracted by shiny things,” the LendingTree channel said. .
It's also helpful to remember that sellers who offer deals like “buy one, get one” are on a mission to get you to spend as much as possible to increase their revenue.
“Keep that mindset in mind. They're not there to save you money,” Channel said.
Other tips for resisting the temptation to add items to your shopping cart to save money or earn rewards:
- Stick to the list. Make a list of what you need when shopping and stick to it.
- Unlink your credit card from your retail website. By storing your payment information online, you can easily spend your money with just a few clicks. Sure, it may seem like a hassle to enter your card number and go through the checkout process, but it's just a type of friction that can help you save money.
- Unsubscribe from promotional emails. Sale notifications alert you to events and encourage you to shop on sites you didn't plan on visiting. Also, keep an eye on social media. If you follow accounts on TikTok or Instagram that encourage you to buy (often with financial incentives), this can lead to more impulse purchases.
- Please sleep on it. Establish a 24-hour rule before making any unplanned purchases.
