WATCH: The official start of the holiday shopping season in the U.S. got off to its usual start, with fights over everything from TVs to lingerie. As popular as the Black Friday sales are for Canadians, we don’t spend nearly as much as our U.S. neighbours. Mike Drolet reports.
Canadians are planning on turning out to Black Friday and Cyber Monday sales in droves, with some lining up in the cold overnight to grab a deal — but if you struggle with paying off your credit card in full every month, take caution. That ‘deal’ may end up costing you a fortune in the long run.
A recent survey by Consolidated Credit Counseling Services of Canada, a not-for-profit charity that helps Canadians manage their debt, found that 35 per cent of those polled said impulsive shopping was their largest source of consumer debt.
READ MORE: The biggest money mistakes Canadians make
Consolidated Credit warned that getting swept up in the frenzy of the shopping season may leave consumers with regret — and debt — for years.
The charity compiled a sample list of advanced Black Friday and Cyber Monday sales and calculated how much that purchase would cost in the end, if you charged it to your credit card, then only made the minimum payments on the debt.
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A new fridge, discounted to $1,899.99, would take nearly 15 years to pay off if you only made the minimum payments on your credit card. Add in more than $2,400 you would pay in interest, and that ‘bargain’ fridge could end up costing you over $4,300.
| Item | Discount price | Savings | Time to pay off with minimum payments | Total interest charged | Total price |
|---|---|---|---|---|---|
| Samsung Refrigerator (Best Buy) | $1,899.99 | $1,000 | 14 years, 11 months | $2,414.57 | $4,314.56 |
| MacBook Air (Staples) | $899.00 | $200 | 8 years, 8 months | $829.63 | $1,728.63 |
| 49” LG TV (Future Shop) | $799.99 | $500 | 7 years, 9 months | $671.31 | $1,470.31 |
| Snow Blower (Lowe’s) | $599.00 | $100 | 5 years, 4 months | $354.66 | $953.66 |
(Calculated at 19% APR; Minimum payments = interest + 1% of balance)
“Consumers’ hearts are in the right place at this time of year, seeking out bargains to minimize their holiday spending,” said Jeff Schwartz, executive director of Consolidated Credit. “But if these deals end up on your credit card, you could be paying a lot more for them over the long run.”
“When you see the crime and punishment of making monthly minimum payments, it becomes very clear that any money you might’ve saved from a holiday discount is quickly evaporated,” he said.
If you are planning on shopping during Black Friday and Cyber Monday, keep these tips in mind:
- Don’t spend what you don’t have
- Make a list of the items you need and stick to it
- Search online for the lowest prices, using comparison tools like RetailMeNot and RedFlagDeals
- When shopping online, don’t store your banking information on the online retailer’s website. Having to take the extra step to manually enter your banking information before checking out may curb impulse shopping and give you time to ask ‘do I really need this?’
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