With Black Friday and Cyber Monday just around the corner, the holiday shopping season is about to get into full swing. Savvy shoppers will take advantage of coupons and sales wherever they can – but watch out. A new report says coupons and sales can be a “trap”, set by sneaky marketers who are conspiring to separate you from your money and put you deeper into soul-crushing debt.
So, happy holidays!
According to new research from the online lender Elevate, “common tactics that consumers use to limit spending may actually lead to overspending”. A survey of shoppers conducted just after the end of last year’s holiday shopping season found that those who shopped the sales were 50% more likely to say they ended up spending more than they thought they would.
“Coupons don’t help much, either,” the report goes on. Shoppers identified as having low credit scores who shopped with coupons were still 49% more likely to say they overspent during the holidays.
So Elevate is warning holiday shoppers to “beware of the traps”.
“Traditional tactics to spend less during this time generally don’t work,” said Jonathan Walker, executive director of Elevate’s Center for the New Middle Class. “In fact, our research shows that many of those efforts correlate with higher consumer spending. Marketers know what they’re doing.”
Overall, Elevate says shoppers with low credit scores are 62% more likely to incur additional debt – an average of more than $800 – as compared to shoppers with better credit.
So if coupons and sales are a “trap” – then what are you supposed to do, buy everything at full price?
Elevate says the key is to set a spending limit – and, regardless of whether you use coupons or look for deals at all – stick with your budget no matter what.
“Strict budgeting was the most powerful way to control holiday spending,” the report concluded.
Cash-strapped shoppers who budgeted were less likely than others to have overspent. In fact, they were also more likely to say they saw an improvement in their finances after the holidays.
The annual Elevate survey is meant to gauge the spending and saving habits of “the new middle class”, which Elevate defines as “non-prime Americans”, or those with a credit score below 700. And typical savings strategies like coupons and deal-hunting that work for wealthier shoppers, may not work as well for them.
“The holidays can be financially stressful for everyone,” Walker said after last year’s survey. “Marketing tactics – sales, coupons, credit card points – may look like ‘bonuses,’ but businesses know how to get consumers to spend more money. By approaching the season with a budget and plan, consumers can protect themselves and their financial wellbeing.”
So before you jump on this year’s hot Black Friday deal, or line up outside a store on Thanksgiving night to get your hands on a doorbuster, be sure you don’t end up spending more than you’re saving. Emerging from the holiday season in good financial shape could end up being the greatest holiday gift you give – to yourself.
Image source: Walmart
