When it comes to saving money, most of us probably think we’re pretty good at spotting a deal. But some popular so-called “savings tips” can actually cost us in the long run. Here are five hidden shopping pitfalls and how to steer clear.
Store Credit Cards
We’ve all been asked by a cashier if we’d like to earn a discount by opening a store credit card. While the immediate 10% or 15% savings may be tempting, it can do long-term damage to your credit score.
That’s because store cards have relatively low credit limits — starting you out at $500 or $1,000 — making it easier to max out your card and potentially hurt your credit score. Your so-called “credit-utilization ratio” measures the amount of debt you’re carrying versus your total credit limits. The higher the ratio is, the lower your score. Plus, these cards often tack on exorbitant interest rates of 20% or more, so if you carry a balance month to month, that interest payment can quickly outweigh that initial discount you got in the store.
Also keep in mind that store-issued cards often provide members with perks and incentives to spend more, and if you’re on a budget it’s probably best to do without the temptation.
Instead, stick with a major bank credit card with no annual fee, a low interest rate and a sizeable limit. Pay it off regularly and your credit score will thank you.
Retailer Marketing Tricks
Retailers have plenty of tricks up their sleeve to get us to spend more. Some top ones that are best to avoid: The 5 for $5 or 10 for $10 deal. Usually this is just another way of saying “1 for $1.” You don’t have to buy all 10 to get that price.
Another crafty way stores get us to spend is by placing quantity limits on particular items. Restrictions like, “Limit 3 Per Customer” at the winery, for example, make the discounted bottles seem scarce, so we feel the need to stock up. But don’t worry, there’s usually more where this stock came from.
Some Dollar Store Deals
Dollar store bargains are all the rage, but not everything sold here is worth your money. According to Consumer Reports, dollar store electronics and even extension cords could be cheap fakes. Some have even been marked with imitation UL labels (the company that evaluates electronic product safety).
While you’re at it, double-check the batteries. Dollar stores sometimes sell carbon-zinc batteries, which won’t last as long as the pricier alkaline versions. They’re susceptible to leaking, too. So shop safe and buy these items at home improvement stores or big box retailers.
You may also want to think twice before stocking your medicine cabinet with dollar store medicine and vitamins. Consumer Reports warns meds like ibuprofen or aspirin can sit on shelves long past the expiration dates. They also found certain varieties of multi-vitamins failed to have the amount of nutrients listed on the label. You’re better off buying over-the-counter generics at your local pharmacy.
Buying a second-hand coat or a previously-owned car can make perfect sense. But purchasing some other used items can be an utter shopping pitfall. For example, some used baby products, like cribs and car seats can pose safety hazards.
Even if the car seat looks like it’s in great condition, there’s no way to tell if it’s been damaged. With safety technology changing nearly every year, Consumer Reports says it’s best just to buy new one, starting for around $60. The same goes for cribs. There are often recalls, and you won’t know if the item was assembled correctly. Buy new for as low as $150.
We want to hear from you. Which shopping pitfalls have tricked you? Connect with me on Twitter @Farnoosh and use the hashtag #finfit.