Why seasonal sales events can be a waste of money

Buying items on credit will cost you much more in the long term than the Dh200 you are saving

The number of payments made using buy-now-pay-later plans has increased during Black Friday sales this year. Reem Mohammed / The National

For some, the recent Black Friday sales are anticipated, planned for and talked about nearly as much as Eid, Thanksgiving or Christmas. It’s a hugely significant event in their annual calendar.

And as with many annual celebrations, Black Friday sales seem to be extended long past the day in question. It feels more like a season than a day.

Black Friday started off as a one-day event, then we had Cyber Monday and now we have Cyber Week, which extends the online sales into the week after Cyber Monday.

The first known recorded Black Friday sale started in 1951 and refers to the day when retailers go from being in the red to black as shoppers rushed to stores after Thanksgiving. So, it’s an important day in retailers’ annual calendar, too.

A report from data trackers Adobe Analytics shows that 2021’s Black Friday sales came in at $8.9 billion, just slightly below 2020’s sales of $9bn. They also predicted that Cyber Monday sales would be between $10.2bn and $11.3bn, making it the biggest online shopping day of the year.

The same report says the number of payments made using buy-now-pay-later plans this year increased 466 per cent compared with 2019. The value of purchases paid for with this type of credit is up 447 per cent in the same period.

And herein lies the concern. How much of that $20bn in sales was paid for using credit cards because customers didn’t have the cash to pay for their purchases? How much will those items cost them in the long run with interest and penalties on unpaid credit card bills?

I speak to many people who spend more than they planned during these sales, usually because they didn’t plan and it’s largely reactive spending. While they enjoyed the initial adrenaline rush of the purchase, they experienced regret very soon after.

The feeling of “need” that sales marketing and events triggers in people is interesting.

Many years ago, I was shopping during the sales with a relative. She insisted on buying a pair of patterned tights that were not her style and too small for her but because they were reduced by 90 per cent, she simply had to have them.

My mother and I challenged her need for such an item. Her response was: “It’s a bargain even if I never wear them!”

The feeling of getting the bargain is what is being bought here. The item being bought is actually irrelevant.

What is the longer-term impact of this behaviour or tendency to buy things you don’t need but can’t resist because of the discount? The obvious answer is debt but it impacts more than your financial liabilities or credit score.

I am a foreigner who lives in the UAE. I will eventually move to my home country and because I don’t have debt, I know that, financially, I am free to move if I choose to. But what if I did have debt?

Recently, I worked with a woman who, while on holiday in her home country, met someone she could see a potential future with. She came back to the UAE full of the excitement of a new relationship but also full of shame, regret and annoyance. Why?

Because she has debt in the UAE. While this was not new information for her, what was new was the realisation that she cannot move home until her debt is paid and she doesn’t want to explain to her new partner why she is immobile. She doesn’t want to look irresponsible and it filled her with frustration, regret and shame.

She would willingly forgo anything she purchased in the past to have the sense of freedom being debt-free would bring. To be able to plan to move when she feels ready and not have to worry about how her new partner would view her for having substantial debts.

Those shoes, that sofa, that gorgeous piece of art may be reduced for 24 hours only, but buying it on credit may reduce your life in ways that will cost you much more than that Dh200 or Dh300 you might be saving.

Think about this: if you don’t buy the item, you may be missing out on the discount. But if you do buy it, what will your future self have to miss out on while you are working on paying off your debt?

Carol Glynn is the founder of Conscious Finance Coaching