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Financial expert sounds the alarm on the savings trend: an old trap with a new name that’s hitting your wallet

“Spaving” – spending more to save – is an old “trap” with a new name that hits grocery stores, retailers and even online gambling.

While sometimes it helps to save money, a personal finance expert explained how consumers can avoid becoming the “victim” of the marketing ploy.

“The whole concept of ‘spaving’ is to encourage consumers to buy more,” said the founder of Kuderna Financial Team and “What should I do with my money?” author Bryan Kuderna told Fox News Digital.

“You see different examples of this throughout the economy. And where it hurts the consumer is if it encourages them to waste money on buying more than they need, just to make them feel like, okay, now I understand the deal.”

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Some of the biggest “savings” offers are promotions like “buy one, get one,” in-store “cash” to use on future purchases, free gifts, or even programs like “ subscribe and save”.

“These are just different marketing ploys to get consumers to buy more, and in some cases it works very well,” Kuderna said. “If we use coupons to get what we need, and we also get a good deal at the same time, then it’s definitely a win-win. But as we see so often… that’s not the case .”

Americans have struggled for years under the weight of inflationary pressures, and rising prices after COVID lockdowns have prompted more households to rely on credit cards to make purchases.

From 2021 to the end of 2023, credit balances jumped 47%, the largest increase ever recorded over three years. Credit analysts also predict that credit card debt in the first quarter of 2024 will likely reach record levels.

As finances prove difficult for many American families, Kuderna offered some advice to consumers on how to overcome the savings trap and stay in control of their money.

“The best way for consumers to approach a savings deal is to pretend it’s not even there, as if they’ve never seen it,” he explained.

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Consumers must first remember to “buy what you intend to buy,” he stressed.

“Don’t buy what you feel obligated to buy. Then you almost become a victim of the marketing ploy. And that’s obviously good for the retailer but not good for the consumer.”

He also reminded consumers to exercise “caution” when it comes to store credit cards, despite the sign-up bonuses and perks offered to cardholders.

“The reason you see a lot of these really cool perks is because these store credit cards are very profitable for that retailer, and that’s where people can sometimes access them if they have these balances. they may end up spending on store credit card interest, late payment fees, or anything else that could pale in comparison to the small savings they made at one point when they opened the credit card. credit.

Kuderna also advised turning off app notifications or unsubscribing from emails if consumers feel “drawn” to these marketing messages.

“Finally, what I sometimes tell people is that a lot of these (sparing deals) are based on buying in bulk and buying in bulk with economies of scale is great for the But again, if we go beyond the limits and start creating waste, that’s not the case,” Kuderna added.

“Know what you want to buy and if you want to go for it, go for it, but don’t get the same volume at a normal retailer where you pay a lot more just to get a little saving,” he said. “That’s where you have to look at what the net savings are from some of these savings offers.”

As spaving pitfalls become more common and expand to new industries like online gaming and streaming services, Kuderna urges consumers to be vigilant and avoid becoming a financial victim.

“Sometimes you just have to sit back and go back to basics and say, okay, are we getting our money’s worth here?”

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News Source : www.foxbusiness.com
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