Finding the perfect gift isn't the only challenge we'll face this holiday season. High-pressure tactics, too-good-to-be-true deals and unexpected fees await us.
Whether you're shopping online or in-store, watch out for these sneaky schemes:
Limited time only offers. No sale lasts forever, but tight deadlines and come-ons like "act now" and "this weekend only" can put on the pressure. True, there are good deals to be had -- but the sense of urgency can make us forget smart steps like budgeting for big purchases and researching comparable deals.
Dodge it: Buy according to your own timeline, not the retailer's. Don't worry if you miss the sale -- there's always another one coming, says Consumer Reports. Besides, when it comes to items like electronics there's always going to be something newer and cheaper on the market soon.
Inflated then discounted prices. A big gap between the "regular" price and the sale price certainly sounds good... until you take a second look. Some stores inflate the original price to make cuts look deeper than they actually are. In some cases, advertised prices may even be above the Manufacturer's Suggested Retail Price (MSRP). However, many stores set their regular prices below this limit, especially discount stores.
Dodge it: A little comparison shopping can help you avoid this numbers game. Take a look at comparable products and other retailers' prices to get a sense of the item's market value, then you can judge if the deal is worth it or not.
Buy now, save later. Nothing says "repeat business" like a coupon or gift card to use on a return trip. Unfortunately, you may be paying more for impulse purchases in order to meet the criteria, not to mention more taxes. These deals also invite us to spend in a certain place -- but not necessarily the one with the best prices.
But there's more: a spending quota and a limited time to use the card usually means that new merchandise will still be at full price when it comes time to redeem it, experts say.
Dodge it: Do the math. These deals are only a win-win situation when you aren't altering your frugal ways to obtain them or redeem them. If you wait until the usual markdowns show up, you may end up with a better deal.
Freebies. The word "free" is powerful bait: who doesn't want more for their money? According to budget guru Gail Vazoxlade, shoppers often make the mistake of adding the freebie -- usually an item they wouldn't have bought -- to how much they think they've saved. However, these free items can come with a cost, like spending more than you planned or shopping at a specific time and place.
Dodge it: Free items are great if you will actually use them and don't have to go out of your way to get them. Otherwise, don't take the bait.
Door-crashing deals. They're the epitome of "one time only deals" -- and they often have people lining up for hours before the store even opens. However, many people don't stop to consider inflated prices or increased pressure to buy, or they borrow to buy items because the deals are "too good to miss." Usually the trick is to get you in the door to buy something more expensive or make impulse purchases.
Dodge it: Again, do your research beforehand and consider your budget. If it's a product you've been planning to purchase and it's genuinely a good deal, go for it and go home before you risk a shopping spree. Otherwise, save your cash and keep your eyes peeled for the next sale.
Fundraising items you don't need. The holidays are prime time for fundraising, and there's no shortage of items for sale to support charities, school groups and other organizations. If you have a chance to help out a good cause when buying items you need -- like wrapping paper or food items -- feel free to take advantage of it. However, don't feel pressured to buy out of guilt or to get that warm, fuzzy feeling. Only a portion of the cost goes into the charity's pockets.
Dodge it: Don't need it? Say no thank you and make a donation if you want to support the cause.
Extended warranties. They're offered on seemingly everything from furniture to electronics, and retailers have a lot to gain from this popular up-sell. However, experts warn these policies aren't always good value. According to research from Consumer Reports , most products don't break within the extended warranty period and if they do, the cost of repairs is often comparable to the cost of the warranty. Besides, you may be paying for something you already have if your credit card offers extended coverage.
Dodge it: the best time to make this decision is before you hit the store. Make it part of your product research to find out what's covered and what's not, and what options you have available. (Sometimes major chains offer their own protection policies with more perks.) Also, find out what coverage you already have before you buy more -- and read the policies very carefully.
Still not sure? Say you'll think about it. You usually have up until a few days past the purchase to make up your mind.
Gift cards and gift certificates. Think a $25 dollar gift card gives your recipient $25 dollars to spend at their favourite store? Think again. Not all policies are alike, and activation fees and monthly dormancy fees can whittle down the amount. Worse yet, the retailer may be the only one getting a gift -- experts warn that many cards expire, are forgotten or get lost before they're spent.
Dodge it: Give cash or a cheque instead. If you go the gift card route, look at the policies closely and compare. The rules vary among retailers, malls and credit card companies, not to mention province and country. (For full details, check out Remembering the rules for gift cards.)
Return policy limitations. Every retailer big or small has their own way of handling returns, especially during the holidays. To make matters more confusing, how you buy can also make a difference -- like online versus in person. Some items like music, movies and software can't be returned at all if the seal is broken.
Dodge it: Know the policy before you buy -- print it out or get it in writing if you have to -- and make sure your recipient is aware.
Re-stocking fees. It's fun to have something to play with on Christmas Day, but opening the box could mean a substantial penalty if you change your mind. Re-stocking fees can cost up to 10-25 per cent of the original purchase price.
Dodge it: It's pretty simple: don't open items you plan to return. If you're on the buying end of the equation, ask about the return policy and exercise caution if you think a gift is destined to be returned.
Return shipping. Shopping from online only retailers or stores where there isn't a brick-and-mortar location nearby can come with a catch: shipping costs for returns or exchanges. Some online retailers like Amazon.ca will deduct the cost of shipping from your refund while others like Lee Valley will reimburse you. Some companies will cover the shipping costs if you request an exchange or replacement.
Dodge it: Did we mention to look at return policies before you buy? When in doubt, a gift card to an online retailer or cash can come in handy.
Ultimately, the best thing we consumers can do during the holiday shopping crunch is to keep to our savvy habits. Research the products you're interested in, carefully evaluate deals and don't give in to pressure. Stick to your list -- and to your budget -- to keep your finances merry.
Sources: Consumer Reports, Gailvazoxlade.com
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