This year, Black Friday will be on November 26. As has been the trend for the past few years, many retailers have already started offering discounts on products since the beginning of the month.
Last year, many South Africans took to social media to lament their discontent with what many called “Black Friday scams.”
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In some cases, prices were inflated ahead of date and then lowered again for Black Friday, with no real savings benefit to consumers. Some media outlets have already started the price comparison checks for this year’s Black Friday and are finding that this same scenario is playing out once again, with various brands and retailers guilty of this artificial inflation. However, there is no doubt that South Africans will continue to participate in Black Friday shopping, whether online or in person.
I encourage consumers to carefully consider the cost of their Black Friday purchases, especially if they are not paying cash for an item. South Africans, like the rest of the world, are tired and exhausted after another rough year of the pandemic and its aftermath. One can understand the human need to buy something that will bring you some joy oneyourself or a loved one. The problem arises when consumers, who have access to credit, use it rashly or without a full understanding of its total costs, terms and conditions of recovery.
Last year we saw consumers choose to fill their grocery cabinets with daily necessities, as well as spend money on expensive items like appliances. However, many used their credit cards or even took out a personal loan to pay for these purchases. By doing this, they not only denied the “savings” on these items, they actually ended up paying more.
NDA did an exercise to show consumers what the true cost of their spending could be, should they be using credit to finance their Black Friday purchases.
Considering the different interest rates and repayment terms, it is clear that there is no true Black Friday, or any day – savings, when using credit for purchases.
A TV with a “cash” price of R5000 can eventually end up costing almost double when paid for with a personal loan. South Africans are known to be poor savers. This has undoubtedly been compounded by the pandemic. However, it makes sense to save R500 per month over a period of 10 months, to be able to pay for the same TV, than to access credit and possibly pay more than double for your purchase.
Not being able to maintain your loan agreement payments can have your credit history negatively affected and can lead to harassment by debt collectors and even legal action by creditors. Nobody wants to end up over-indebted and in need of debt relief solutions, due to Black Friday shopping. Consumers should seriously consider all the costs and implications of using credit for Black Friday purchases.
To TTo help South Africans better prepare for Black Friday, here are some practical tips for Black Friday shopping:
- Decide in advance how much you can spend on Black Friday specials and stick to that amount when shopping days roll around;
- Work backwards from this amount. Make a list of what you want to buy for holiday gifts and determine how much you can afford;
- Given the global impact of the pandemic, family and friends will understand if you reduce the number of gifts;
- Black Friday is not just for luxury items. Look for essential items (like food and toiletries) that you can save money on, especially when buying in bulk. Add it to your list and include it in your budget;
- On the day, if you add a purchase / recharge amount to your list, make sure something goes off your list. Do your best to stick to your plan and budget;
- Avoid impulsive purchases of items that are not on your list;
- Start checking the prices of identified products in advance to be sure you’re really getting a bargain when Black Friday rolls around.
- If you start planning early enough, obviously it will be better to save cash for your Black Friday purchases rather than max out a credit card or apply for a personal loan to accommodate your Black Friday expenses.
- Start looking for stores and online shopping platforms that use the rewards system of your debit / credit / store cards;
- Be on the lookout for online fraud and scams during the Black Friday period;
- When shopping with your credit card or using funds from an overdraft or personal loan, consider the interest rate and repayment amounts. Compare it to the “savings” you are getting on an item.
Times are tough and the fight is real. Sure, every rand saved helps, but be careful not to succumb to the hype and insanity of retail advertising that can make you spend money you don’t have.
We must play our role in stimulating the economy, but not at the expense of our own personal and financial well-being. If you’re already struggling to pay off your debts and don’t have enough money on hand for everyday living expenses, then the rule of thumb is simple: If you didn’t need it before it went on sale, you don’t need it when you need it. goes on sale.
Sebastien Alexanderson, CEO of National Debt Advisors (NDA).