No Good Deals with Credit Cards

December 17, 2012

Retailers offer credit cards with "special" discounts attached to lure you into piling on debt. Especially around holidays, they make offers you "can't refuse". Listed below are some ways companies trick you into accumulating debt. I will also provide you ways to avoid the tricks to keep your finances on track.

Discount percentage/dollars off your purchases

Whether it's 5% or 10%, you are manipulated into thinking that this is a good deal, and at least may be enough to pay the sales tax. The benefit of the discount goes away if you need to make payments on a card with an interest rate up to 24.99%. Here's an example of a percentage off credit card offer*. Here is an example of a dollars off credit card offer*.

Free shipping when you use your credit card

Retailers particularly like this one during the Christmas season. Just because you get free shipping, doesn't mean it's a good deal. Companies usually hide the shipping cost somewhere else in their pricing. Or, they know that they will get the shipping cost back from you through accrued interest on your account. Here's an example of a free shipping credit card offer*.

Reward points when you use your credit card

Cards that offer a reward program are sometimes difficult to understand. You have to keep up with how many points you receive for how much you spend. Companies "reward" you further when you achieve a certain level of buying. Imagine having multiple reward-based cards and having to keep up with them all! Whew! Here's an example of a reward-based credit card offer*.

Here are my recommendations as an alternative for signing up for, or keeping, a credit card account.

Shop Sales

The discount you receive when something is on sale is much higher than the promised 5-10% off using your credit card. I recommend buying when the discount is at least 40%, or 30% on must-have items.

Other Shipping Options

You can usually get free shipping on websites such as Amazon when you spend $25 or more, regardless of your method of payment. Another option regarding shipping, is to avoid it altogether. If the recipient of your gift lives near you, there's no need to have it shipped if you can find a like deal locally. Sometimes you can find better deals in brick-and-mortar locations that you can't find online.

Reward Yourself

The joy in knowing you avoided credit card debt is better than any offer for points, miles, discounts, etc. Your reward will be paying less monthly interest and saving your family from potential financial hardship. By avoiding these manipulative tactics by retailers now, you'll have more money in your pocket later.

*Links were active on the date of this post.

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