Sunday, November 14, 2010

How to Play the Cash-Back Game

From MSN Money.

I prefer to play the Don't-Spend-In-The-First-Place Game, but hey--to each his/her own.

"In a nutshell, here's how it works: You register with a cash-back site, or several. Say that during the course of your online shopping, you see a deal you like. You log in to the cash-back site featuring the deal you want and click on the item. That will take you to the merchant's site as a cash-back shopper. Once you check out, a portion of the item's price shows up in your cash-back account."

By doing this, you risk opening yourself up to online marketing (and spam e-mails), not to mention hackers and malware. You're also telling everyone in cyberspace where you shop, where you've shopped in the past, and where you're likely to shop again, leaving you ripe for identity thieves.

"Of course, some shoppers prefer delivery, especially on oversized items. Whittlesey, a Mr. Rebates fan, has bought a rain barrel and "a lot of furniture" from because of that company's $1 delivery policy."

How much did he/she overspend on the rain barrel and couch just to get the $1 delivery? That's the trick buried in these too-good-to-be-true schemes--free shipping (or drastically reduced shipping), or cash back rebates, or some other gimmick, to get you to buy merchandise that's overpriced to begin with. These businesses are clever--they aren't going to give the store away. Give-aways like these are always made up for in the price of the item--no business is going to lose money just to make a sale! Any so-called "discounts" come off of the manufacturer's back, the tax man's back (inventory sales), or your own back (through deceptive schemes like these). How do you think businesses survive?

It really compounds the hurt when you have nothing to compare the price of the item to--without some sort of reference point, how do you know it's a good deal or a total rip-off? Unless you've done some comparison shopping, I suggest you hang onto your money. Most of these rebate programs are just giving you back the money you overpaid in the first place (and got taxed on--it's a win for your state, but not you).

The only free lunch I've found is from food demonstrators at Sam's Club on the weekends, and they aren't giving away real food, so not even THAT is free when you factor in the costs to your health after consuming it.

Sometimes I think the author of this article, Donna Freedman, is just too naive for her own good.

Here's more on the cash-back game from MSN Money, and another reason not to bother getting involved:

"As card issuers raise interest rates in return for giving out rewards, that cash you're getting back may not be getting you ahead."

See? Business never gives the store away unless they're going out of business.

NOTE ABOUT FREE SHIPPING: It isn;t ever free--the price of the merchandise is jacked up to compensate for the supposed shipping deal. This week, Wally World is hawking free shipping on its website, but believe me, it isn't free there either! Wally' been jacking up prices slowly for the last 5 years to make money for the shareholder, and he's not about to give away shipping.

It doesn't matter where you shop--shipping is NEVER free.


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