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That Sale Just Cost You More Money
You just walked past the store and you noticed the big sale sign in the window. You take a second peak and wow! That shirt is 25% off. The shirt, formerly $20 is now only $15. After purchasing the sale item, you can now brag to your friends about your great bargain. However, there are a few things you may want to consider:
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Have You Shopped Around?
If a large name brand store puts something on sale, it may still be priced higher than many discount stores’ regular price. I’m not trying to get you to buy all of your clothes at Kmart™, but there are many stores that carry the same brands as Nordstrom’s™ & Macy’s™, but they charge a fraction of the price.
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Did you need the item anyway?
If you were in need of a new shirt anyway and had been looking to purchase one, then this may have been a deal after all. On the other hand, if you already own 40 shirts (you know who you are) then the sale cost you $15, it didn’t save you $5! Perhaps you were actually at the mall because you were shopping for shoes. Well, that same $15 could have been used towards the shoes or something else you actually needed.
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No matter, I just put it on my credit card…
Let’s do the math. You put $15.00 on a credit card with a 17% interest rate. If you routinely pay the minimum on your card and you already have an existing balance, you may have just wiped out your entire 25% savings! Sure, you stretched the payment out longer, but depending on how high your existing balance was and how long before you pay off your card entirely, the shirt may have cost you 25% more than the original price.
Why do you think stores advertise their sales? 1) They want to entice you to buy something you normally wouldn’t. 2) They want you to feel like you are getting a good deal (we all want to feel smart). And 3) They want to get you into the store to get you to buy other items that are not discounted, such as accessories.
There is nothing wrong with impulse buying, as long as you take it into account in your budget, and as long as you can afford to pay with cash. Every good sale you charge on your credit card today could mean two great sales you won’t be able to afford in the future. Remember these points and you can try to outsmart the retailer instead of the other way around next time you are out shopping.
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You can reprint this article for free. Simply include the following byline at the end of the article:
Bill Pratt is the author of "Extra Credit: The 7 Things Every College Student Needs to Know About Credit, Debt & Ca$h" and "Money Made Simple". You can find tons of useful articles and calculators and have your questions about money answered at www.ExtraCreditBook.com |
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