Black Friday Shopping on Credit: A Bad Idea

Credit card interest can make shopping deals disappear

(TORONTO, ON) – Shoppers, start your engines.  The Black Friday/Cyber Monday weekend is upon us, marking the unofficial kickoff to the holiday shopping season.  The American shopping weekend has established firm roots in Canada, with consulting firm Accenture saying 37 per cent of Canadians perceive Black Friday to be the day with the best deals, compared to the 25 per cent who say Boxing Day has the best buys.

Debit and credit transaction company Moneris saw an increase in spending in each province during last year’s shopping weekend – Saskatchewan leads the way with an average transaction of $140 (Consolidated Credit’s website displays Black Friday and Cyber Monday spending habits on a sharable interactive map of Canada).

The enthusiastic card-swiping leaves some financial experts worried that Canadians might be getting ahead of themselves.

Hunting for deals is a good thing – we spend a lot of money on the holidays and any attempt to cut costs should be commended,” comments Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada.  “But if you’re putting these purchases on your credit card with no plan to pay off your balance, these so-called deals will cost you a fortune.”

With the help of Consolidated Credit’s Credit Card Debt Calculator, we looked at some Black Friday and Cyber Monday advanced deals to see how much Canadians would spend if they only made minimum monthly payments on their holiday bargains:

Item Discount Price Savings Time to pay off with minimum payments Total interest charged Total price
Samsung Fridge (Lowe’s) $1,898.00 $900 14 years, 11 months $2,411.40 $4,309.40
MacBook Air (Best Buy) $1,049.99 $150 10 years, 0 months $1,068.75 $2,118.74
49” LG TV (Walmart) $798.00 $400 7 years, 9 months $669.71 $1,467.71
Snow Blower(Sears) $499.99 $150 4 years, 0 months $216.45 $716.45

Calculated at 19% APR; Minimum payments = interest + 1% of balance

Monthly minimum payments keep you on a debt treadmill,” adds Schwartz. “Stretch out your repayment and say ‘good-bye’ to the money you saved on Black Friday.”

If you’d prefer to take advantage of Black Friday and avoid shopping on credit, you need to go into the weekend with a plan.  Try these tips to help protect your bottom line:

  • Make a list and check it twice – Come up with a holiday shopping budget – set a maximum amount for spending. Decide who gets what – save the big gifts for immediate family and consider homemade gifts or other smaller gestures for others. A list is your best defense against impulse shopping.
  • Browse and compare – Shop around before you buy. It’s easy to compare prices by using shopping apps like RetailMeNot.  You can also let sites that aggregate results like RedFlagDeals do the work for you.
  • Don’t store your banking information – Saving your credit card information on shopping websites allows for a quick, easy “one-click” transaction. But maybe it’s too quick, and too easy.  Forcing yourself to punch in your digits gives you precious reflection time to decide whether or not you actually want the item.
  • Deal or no deal? – There have been reports of retailers steadily increasing their prices in the fall and then dropping them during the holiday season to create the illusion of a discount. Avoid being tricked by doing your homework and knowing about average pricing.

Remember the intent of holiday shopping – you’re buying gifts to show your loved ones that you care,” adds Schwartz.  “The gift-giving gesture shouldn’t drive you into debt!”


How Canadians spend big on Cyber Monday.

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