Maybe you were bored, maybe you were hungry, maybe you went over to a friend’s house and saw her new HDTV. And you just had to have one too. You headed straight for the mall or your fave electronics store. And then, well, it was all such a blur, and suddenly you´ve got quite a few hundred dollars more on your already cumbersome credit card balance.
But you’ll do better next time, right? Avoid debt traps, which people get caught up in more often than you’d think!
Here’s what you should not do
Sign up for every credit card
Sign up immediately for every credit card offer you receive, especially the ones with all those bonus points and frequent flyer miles. You will never use them, especially because you’ll only get them after spending at least $1,000 and they’ll expire before you have the chance to. But that’s okay, just like the huge annual fee after the first year, because you’ll remember to cancel the card before the deadline, right?
Buy every single discount item out there
Go for the “buy 2 get 1 free“ deal even though you know you only need one smartphone in the first place. You know that this purchase is a bit over your budget and that you might not find someone to pay for the extra contracts, but they promised you a free phone! Only, you have to pay full price for it now, but they’ll mail you a rebate code in a few months. If you remember to send it in with the receipt (and you haven’t lost it) they’ll credit your bill sometime next year!
Get every single item on a warranty
Say yes to all the extra warranties offered by the nice and convincing salesman even though the only one you really need is the free manufacturer’s warranty. Whether it’s on a used car, a printer, or a microwave, the extended warranty they tack on will definitely come in handy… sometime.
Go on an unlimited shopping spree
Splurge on fashion! Speaking of nice and convincing salespeople, the saleswoman at your fave boutique, who works on commission, really does have good taste. She knows that you can’t just buy the dress alone–you’ve also got to have the matching shoes, earrings, necklace and wide belt to go with it.
Give out your bank information
Give your credit card information to take advantage of that free trial for video games by mail. Just like the “buy 2 get 1” deal, you’ll remember to cancel it before automatic payments kick in. If you forget, it’s only $10 a month, which isn’t too bad.
Here’s what you should do
Find the right credit card
Choose the credit card that’s best for you, and only if you can manage it. It’s easy to pick out a card with 10,000 bonus miles and imagine that you’ll be flying all over the world for free. But even if that weren’t true, wouldn’t it be better to have a card with a 0% interest rate to help you pay down your debt? Would it be best to stick with what you already have, or avoid credit cards altogether? Most likely, yes.
Trying to look for the right credit card for your needs? Look for a credit card on SuperMoney’s personal credit card comparisons page to find the right one for you.
Bulk purchase on consumables
Buy 2, get 1 free should only apply to consumables that you will actually use. If it requires you to dish out an extra $50-100 for another cell phone or tablet, it’s not a good deal. Toothpaste, canned goods, and toilet paper are all good things to save money on whenever possible–but always stick to your budget. If you go to the store with a set amount to spend, don’t ignore your plan in order to take advantage of a sale unless it’s sensible.
Be realistic about warranties
Be realistic about warranties because nearly everything that needs coverage already comes with it upon purchase. Electronics, appliances, and vehicles come with a manufacturer’s warranty that covers unexpected damage or defects for several years. When a salesperson is trying to convince you to tack on extra coverage, either with a one-time payment or a monthly charge, they’re only in it to make the extra commission.
Shop for yourself, not somebody else
Would a salesperson who is trying to get a bonus ever tell someone that a pair of shoes or an accessory looks bad? Never, and they’ll always try to convince you that you need the entire look, which can be put together with something else, and have you sign up for the store credit card if you can’t afford it. Instead, have a pre-shopping plan and only buy what you need. To avoid sales tactics, go to a department store or thrift shop, and mix and match your own outfits with the advice of a friend.
Be vigilant about your bank account information
Protect your bank information, especially when thinking about signing up for timed offers. Companies are after your credit card number because it’s highly likely that you’ll forget to cancel the trial before they start charging you. They’re wishy-washy about when they’ll charge you, or when your trial actually begins and ends, or even who to call when you want to cancel. Skip this entirely by protecting your numbers, and only giving them out for things you want to commit to.
Walk through the mall, or sort through your junk mail and you’ll see countless offers. Free this, buy that, must have deals meant to convince you that you have to have what they’re selling. Think hard before you say yes to those hefty purchases. Take away the marketing tactics and bonus gift bribes and you might find yourself with nothing more than a bloated credit card bill and buyer`s remorse.
Suchi Rudra is an avid traveler and freelance writer from Texas who covers personal finance, travel, green building, tech, and entrepreneurship. Her work can be found in VICE, The Guardian, Vice, American Way, BBC Travel, Fodor’s, Transitions Abroad, PlanetEye.com, TravelStart.com, Expats.cz, The Writer and India Currents and many other publications.