It’s been a challenging year, and it seems like everyone in South Africa is tightening their belts. A recent McKinsey Global Consumer Sentiment Survey shows just how widespread the struggle is, with a staggering 87% of respondents admitting they’re financially stretched. With the cost of living hitting new highs, Black Friday seems like a golden chance to make your money go further. But be cautious – those Black Friday deals that look so tempting? They might not be as great as they first appear.
This is according to Charnel Collins, CEO of National Debt Advisors who warned retailers often employed smart marketing gags that if indulged could have long term consequences for consumers’ financial health.
The first trick to look out for she said was when retailers sometimes give the impression of huge discounts by marking up prices before Black Friday. “They do this to make the discounts look bigger than they are. For instance, something that usually costs R50 might be raised to R80 and then ‘reduced’ to R60 on Black Friday. It looks like a big saving, but it’s not as good as it seems,” explained Collins.
Secondly, Collins pointed out that Black Friday is famous for its deals that don’t last long, which can make consumers feel like they need to buy something quickly. This kind of pressure often leads to buying things on impulse – even if they don’t need or don’t plan to buy. It’s important to remember that making quick decisions, especially about spending money, usually isn’t the best move.
According to Shopify, research shows that while shoppers aim to snag bargains, they often end up buying items impulsively, lured by the idea of a discount rather than the actual need or value of the product. In a recent survey, more than half (52%) of respondents said they preferred taking a discount overpaying the regular price, even when they did not plan for it.
“Surprisingly, even shoppers who make lists to control their Christmas spending end up buying items on Black Friday that don’t align with their planned purchases. This is often a result of the emotional tug-of-war between the fear of missing out (FOMO) and buyer’s remorse,” said Collins.
Collins also warned consumers against relying on credit for their Black Friday purchases.
Hidden fees and interest rates associated with credit card purchases can transform what appears to be a wise purchase into a prolonged financial burden. Collins stresses that many consumers fail to consider these added expenses.
“When you make a credit card purchase, you’re not just paying the price on the tag. You may be committing to high interest rates and undisclosed fees that accumulate over time,” said Collins “It’s a recurring trap where one impulsive purchase can trigger lasting financial consequences.”
Collins offers the following tips for a successful shopping experience this black Friday.
- Create a comprehensive list of what you truly need: Your list should reflect not just your desires, but also what aligns with your long-term financial goals.
- Establish a realistic spending limit: It’s not just about how much you can spend, but how much you should spend considering your overall budget. This approach ensures you enjoy the discounts without straining your finances.
- Understand True Deals vs. Marketing Tricks: Black Friday is notorious for flashy sales and big numbers, but not all deals are as good as they seem. The trick is in differentiating between a genuine discount and clever marketing.
- Be wary of hidden costs: Hidden costs can turn a deal sour. Always read the fine print. Whether it’s shipping fees, non-refundable policies, or limited warranties, understanding these details can help you avoid unexpected expenses.
- Secure your online purchases: In the digital age, Black Friday shopping often means buying online. Use trusted websites, look for HTTPS in the URL, and be wary of too-good-to-be-true offers that might be phishing scams.
“The consequences of Black Friday splurges extend beyond immediate financial strain. The long-term impact on credit scores can be significant. Late payments, defaults, and bankruptcies stemming from credit card debt can severely damage creditworthiness. This impact can linger, affecting future financial opportunities and stability,” said Collins.
