Budget

How Trying to Save Money Might Be Costing You

I’m going to be honest–I’m all about some deals. I have hawk eyes for sales. I’m always on the lookout for advantages that I can incorporate into shopping trips.

But it occurred to me recently–am I REALLY the one getting a better deal?

Probably not, because let’s be real here–that’s how marketing and advertising works.

But this doesn’t mean that sales and incentives aren’t awesome! It just means that you need to be critical of deals. You might just need to evaluate whether your budget allows for you to take advantage of them.

We are regular Costco customers. Costco recently came out with a credit card, which is awesome because they don’t accept all credit cards.

I was considering closing my current credit card because, frankly, it sucks. It operates on a points system rather than cash-back. So it’s basically just lame and outdated (totally the banker’s words, not mine…). With this in mind, I was pretty gung-ho about closing it and opening a Costco credit card!

That is, until we actually started discussing the pros and cons…

deals saving costing you

 

Credit Card Rewards

The Costco credit card offered 4% cash back on eligible gas worldwide, 3% on restaurant and travel, 2% on Costco purchases, and 1% on all other purchases.

The question is–how much does this affect us based on our current spending habits?

We drive one car and live fairly close to work. With just one vehicle, I don’t spend that much on gas (especially with fuel points from the grocery store). We try not to eat out often and we don’t travel very often (unfortunately). Therefore, it’s likely we’ll only take advantage of the 1 and 2% cash back rewards. Additionally, this card carries international transaction fees.

My bank offers a similar credit card with 3% cash back at restaurants, 2% on gas, groceries, and drug stores, and 1% on all other purchases. There also aren’t any international transaction fees associated with this card.

The card from my bank might actually work better for us and our spending habits. Most of our purchases are from grocery stores and considered non-restaurant and travel. Therefore, with my bank’s card, we would get a higher percentage cash back than with the Costco card.

After speaking with my bank, I found out that I can block my current credit card and open a new one. The biggest advantage of this is that instead of closing the card, it will eventually be closed by the bank for inactivity (which does not affect my credit!). This option will preserve my stellar credit score, which made the decision for me.

Credit card rewards programs are awesome, but make sure you can take advantage while also sticking to your budget. Those rewards aren’t going to mean much if you have to go out of your way to spend more money for no reason!

Credit Card Transfer Fees

If you have multiple credit cards that you want to pay off, you might want to transfer all the balances to one card.

The advantages are that you can transfer your balances to a card with a lower interest rate, pay less interest on the remaining balance, and decrease multiple credit card payments (organization!).

However, there are also fees associated with this, which vary based on the size of the transfer. You’ll also want to make sure you take into account introductory low interest rates, which will return to the full amount after that time is up.

In this case, you will need to evaluate how much total credit card debt you have and whether the fee would be worth the trade-off for the lower interest rate and consolidation. If you have a higher amount, it may be worth it. But if you have smaller amounts on multiple cards, it might be worth it just to go ahead and pay them off separately.

Free Shipping

Who loves Amazon Free Shipping?

Everyone (duh)!

What I don’t love is when a merchant requires me to purchase $X of merchandise before it kicks in. This is common sales strategy, not only for Amazon, but many other retailers. This can bump your total up significantly in order to qualify for free shipping.

But what if the extra merchandise added to your cart costs more than the free shipping itself?

For example, say you have $25 of merchandise in your cart plus $6 shipping for a total of $31. However, you can qualify for free shipping with $40 of merchandise. In order to qualify for free shipping, you would have to spend an additional $15 to hit that $40 qualification (probably more since it can be difficult to hit that mark exactly).

In this case, you would spend more than TWICE the original shipping amount just to get free shipping on items you didn’t plan on even buying.

So is it really a good deal?

Don’t get me wrong–this is a tempting offer. I try to keep a running Wish List so that when we finally accumulate enough items, we can take advantage of free shipping. That way, it fits into our budget and we’re not tempted to add items to our cart for the sake of free shipping (and spend more than we would otherwise).

If you frequently shop online, and buy less than $49 of merchandise at once, a program like Amazon Prime might be a better option for you. That way, you’re not constantly adding merchandise for free shipping. But, again, this depends on your budget and whether such a membership would be worth the price for you over time.

BOGO Deals

I would also lump¬†“2 for $X”¬†sales into this section as well.

Seriously, when is it NOT tempting to load up on 2 for $7 sliced cheddar or 10 for $10 oranges??

Well, when you could buy a block of cheddar for less than one package of sliced and an 8 lb. bag of oranges for less than $10, it doesn’t sound like such a good deal anymore.

This sales technique is also very common with clothing and shoe retailers. How many times have you seen advertisements for “Buy One Pair, Get 50% Off”? This is where sticking to your budget is vital. If you planned on buying more than one pair of shoes, this is a great deal! However, if the deal makes you deviate from your original plan and spend more than you anticipated, it may not actually be a good deal.

This isn’t to say that BOGO and other deals like this aren’t good deals! It just means that you should compare alternatives before loading up your cart with piles of merchandise (that you might be paying more for than you need to).

I will say, though, that BOGO Free is always a good deal in my book, as long as the promoted item is already on your shopping list!

Don’t be afraid to take your time and really analyze and evaluate different promotions. It’s important to learn about the strategies behind different types of sales and promotions. Remember–they will ALWAYS benefit the seller.Take advantage of deals that benefit YOU rather than only the seller.

Stick to your budget and you will ALWAYS come out on top!

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