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Several times, I’ve done what is considered unthinkable by most personal finance experts: I signed up for store credit cards at the point of sale. I have a Macy’s card, which I signed up for a discount on clothing I was planning to buy — clothing that is probably overpriced in the first place. But when I was first starting to get some freelance web design off the ground after college, while working at a non-profit and in need of another source of income, I needed to stop using my roommate’s computer. My own desktop computer was insufficient for working on the latest technologies because it was about six years old and couldn’t handle broadband internet connections. I couldn’t afford a computer, but to get my business off the ground, I bought the computer with a 0% APR store credit card, having qualified for just enough credit to make the purchase possible (what a coincidence).

That card was an earlier incarnation of the Best Buy Reward Zone® Credit Card. For me, the attraction was the 12-month 0% APR offer on the store purchase at the time, and the card was not free from problems. Because of how they tend to trap you, and are used to encourage purchasing of items you cannot afford, you should stay away from store cards in general. But for those who frequent Best Buy, the latest incarnation of the card has a decent rewards program.

Keep in mind that if you’re buying your electronics and most other items at Best Buy, you’re already likely overpaying. I still manage to find good deals, but only on discontinued items when I can haggle with the manager. Unlike 1999, I prefer Amazon.com or specialty discount stores like B&H Photo and Video and NewEgg over Best Buy. The rewards program might make it worthwhile, especially if you manage to find good deals at Best Buy.

Like most credit cards, the Best Buy Credit Card offers an incentive for signing up, but it varies. If you sign-up in person at a Best Buy location, you may receive a discount on your first purchase using the card. If you sign-up online, there is no discount. The card also includes a rewards program which is quite lucrative when compared to others. Here’s how points are earned:

  • Earn two points for each dollar spent at Best Buy and BestBuy.com.
  • Earn one point for each dollar spent on dining and grocery purchases.
  • Earn one point for every two dollars spent everywhere else MasterCard is accepted.

When redeeming your rewards points, 1,000 points are worth a $20 Best Buy gift card, so you’re effectively earning a cash back rate of 4% when you shop at Best Buy, 2% when you buy gas or groceries and 1% on everything else. This isn’t true cash back, though, because the rewards must be used at Best Buy. Still, the offer isn’t bad for a store credit card.

The largest detraction of this card is the interest rate and fees, which are generally higher than other cards I write about on Consumerism Commentary. The purchase APR on the Best Buy Credit Card is 17.99% to 22.99% variable. If your credit history is less than excellent, you may receive the Gold version of this card, accompanied by a $59 annual fee. Otherwise, this card does not carry an annual fee. There is no introductory offer either, so there is no reduced interest rate for balance transfers or purchases.

Cashiers are often rewarded bonuses when they successfully pressure or otherwise convince shoppers to open up a new credit line at the point of sale. It’s a very effective technique, and dangling an immediate discount and future discounts traps even educated consumers. I still use my Macy’s card, and when I arrive home after shopping, I access my account and pay the bill right away so I don’t get caught in any high interest traps.

As a rule of thumb, no financial decision should be made spur of the moment. The Best Buy Reward Zone® Credit Card may look good initially but its high interest rate and strict rewards program will benefit too few. Unless you are an expert at finding deals at Best Buy, you’d be better off looking into an all-around cash rewards credit card that offers big bonuses with a low interest rate and no annual fee.

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It is in any consumer’s best interest to try to get the lowest price on all purchases, yet haggling, negotiating, or bargaining, at least in my culture, is not a social norm. Other than in specific situations such as buying a car that is not a “non-negotiable” brand like Saturn or Scion, haggling is uncommon. A few months ago, Smithee presented an article summarizing several tips for haggling.

If you look around the internet, you can find even more tips, sure to help readers on the path to getting what they want to buy at a price they want to pay. But most people won’t even get to the point where they can use these tips due to a number of emotional barriers.

Emotional barriers

The impressions of strangers. As haggling is not a “normal” social activity, someone who considers haggling might refrain for doing so for the fear of being seen as “abnormal.” Most retailers operate in public, so it is more than likely other people will be able to observe your purchases. Once you ask a salesperson in a retail electronics store, “What is the best price you can offer?” you might get stares from strangers.

What could they be thinking? She can’t afford to shop here. He is cheap. She thinks she deserves special treatment. He doesn’t know how to manage his money.

The opinions of strangers are irrelevant. It is simply in your best interest to buy what you want for the best price possible. The best way to bypass this barrier is to ignore everyone other than the salesperson, the sales manager, and yourself. As far as you are concerned, no one else is in the room.

Your self-image. One thing that might be preventing you from starting the dance of number-offering is the idea that the strangers might be right: you are cheap. If the item to be purchased is something you can legitimately afford, why bother haggling at all? People buy things they can’t afford every day without negotiating the price. Perhaps you think they should be the people haggling while those who can afford the purchase should be happy to pay full price.

The only reason your self-image is at stake is today’s culture. But if you would feel inadequate for trying to pay less than other people, take yourself out of the picture. Approach the negotiating as if you were speaking on someone else’s behalf or consider the purchase a business transaction where it is your reponsibility to your shareholders to achieve the best price.

Fear of rejection. This is the powerful force that stops awkward teenage boys from asking pretty young girls on dates. The word “no” is one of the most displeasing sounds to the human ear and brain, and people will try to avoid hearing it at all costs. The avoidance means that many important questions never get asked.

A great way to haggle without having to hear no is to ask the right questions. The right questions would never result in a yes or no answer. For example, try, “Considering this is a discontinued product and you’re making room for the new model, what is the lowest price I could pay for it?” rather than, “Can you do any better than that?”. And even if your line of questioning doesn’t result in any savings, at least you tried.

My haggling experience

My best haggling experience was about two years ago when I helped my girlfriend purchase a new television. We found a discontinued model of a standard-definition LCD television. We shopped around, and found the best prices and availability at the now bankrupt Circuit City. The store had two models left, one with a scratch on the side, one without. She didn’t want the scratched model, so negotiation would be a little more difficult.

We had the advantage, however, because we knew the store received the models a long time ago and would be interested in unloading them. The initial salesperson was not authorized to adjust the price, so we involved a manager early in the discussion. We asked to take away the television priced over $300, an already-discounted clearance price, for $200.

At this point, we were starting to attract a little attention. I don’t think strangers were judging us as cheap; they seemed to be curious about whether our negotiation would succeed. $100 off a clearance price was an aggressive discount, but the manager didn’t say no. He went behind the scenes and returned with a price sheet indicating the cost of each television to the store, and I assumed that the document was legitimate. The manager said he would let me have the television for 10% over the store’s cost, so we walked away with the television after paying $220 for a television originally priced more than twice that amount.

Perhaps it was this one incident that set Circuit City on the path towards bankruptcy.

Once you have overcome the emotional barriers to haggling, you will be ready to apply the tips and suggestions like these:

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Haggling for Beginners

This article was written by in Tips. 8 comments.

Coming clean right off the bat: I can’t personally teach you how to haggle or negotiate anything. It terrifies me almost as much as falling in love or doing improv theater. But at least I’m not alone.

Amy Reiter over at Salon.com posted a great article yesterday called “How I learned to haggle”, and while I recommend the whole story, I’ll distill the bullet points for you here:

  • Practice
  • Act as if it’s a game
  • Just say, ‘Is that the best you can do?’ And then be quiet [...] Silence is a great tactic.
  • Negotiate for yourself as if you are negotiating for others

I can also vouch for the silence technique as being particularly effective in getting your co-workers to understand your point of view. I don’t mean offering anyone the “silent treatment,” just including some longer pauses during the course of a conversation that starts with people disagreeing. Now that I think about it, I guess it is a kind of negotiation.

Any other tips? Please leave them in the comments below.

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My Experiences Selling Online

This article was written by in Income. 4 comments.

I recently sold a number of possessions in my year-long quest to vanquish my credit card debt as quickly as possible. Before this, I had very limited experience using online selling tools, and generally thought of them all as a hassle, so I thought I would try more than one and see how they stacked up. Your experiences may differ, along with your selling requirements, but here’s what I found:

Craigslist

I’m fortunate enough to live in a city with a Craigslist presence (check to see if your hometown is on the list), and I had something that I really didn’t want to bother trying to ship: Guitar Hero III for the Nintento Wii. Craigslist, if you haven’t heard of it, is sort of like a city-wide distributed garage sale. You describe what you have using a free-form text entry field, pictures optional, prices optional, limited only by your imagination.

I said that I had Guitar Hero III for sale, found some Creative Commons photos on Flickr, asked for $50, and that was all there was to it. Within a couple of hours I had two offers. The first person haggled with me and asked if $40 would be okay. So I found a Starbucks that was easy for both of us to get to and met her that evening. If I’d waited a little longer, I could have gotten $50 for it from the second person. Lesson learned.

eBay

I had a number of DVD box sets of a favorite TV show that I wanted to unload (while keeping a soft copy of the better episodes on an external hard drive at home). It was easy enough to copy the details of each episode from a wiki to the “Sell item” page on eBay, and after a few repetitions I found it was even possible to find the vital stats with a database that eBay provided.

There are, not to put too fine a point on it, a lot of options for how to sell an item on eBay. I sort of wish there was an “eBay lite” option, or better wizard that stepped me through the process. Also, it tended to break when I used the Safari browser at home. I had to remember to use Firefox.

But my biggest problem with eBay was not really eBay’s fault: they wanted me to estimate shipping costs. The thing is, I don’t own a scale, and I can’t hold something in my hand and say, “yep, that’s about six pounds.”

In general, it seemed to me that eBay is geared toward professional sellers.

Amazon Seller Account

One-click patent silliness notwithstanding, I like Amazon because it is easy. Even without 1-Click, it’s easy. And that ease of use has expanded to their options for selling things online, in my case it was a used video camera.

All I did was find the right model camera by acting as if I was looking to buy one and click a button labeled “Sell yours here”. Specify the condition (new, used, etc.), add comments, pick a price and that’s about it. You get to benefit automatically from any pictures, customer reviews, or any other information that Amazon is already storing about that product.

Amazon also did a good job of estimating the shipping cost for me. The drawback I experienced using Amazon was that I had to wait. This will vary from product to product, of course.

Conclusion

With both Amazon and eBay, there’s something of a process to setting up an account and getting paid. Craiglist is a lot more free-form in that respect. If I was in a real rush, I’d probably use Craigslist again, but for the most part, I prefer Amazon’s way of selling things. I hardly had to lift a finger.

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Festival of Frugality #119: The Quitting My Day Job to Blog Full Time Edition

by Flexo

This morning I have the honor of hosting the 119th edition of the Festival of Frugality! I’d like to lead off with an announcement: I gave my notice yesterday. As of April 12th, I will be a full-time blogger. After months of deliberation, I have decided to take Consumerism Commentary to the next level, and ... Continue reading this article…

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Guest Post: How Not to Buy a Car

by Flexo

All this week, Consumerism Commentary is featuring guest bloggers. In this post, KMC from Advanced Personal Finance shares a personal adventure with the local car dealership and the lesson learned. About six months ago, my wife’s car was rear-ended by a delivery truck while she was on her way to work. Fortunately, she was not ... Continue reading this article…

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Consumer Reports’ Unique Approach

by Flexo

Last weekend at the wedding I attended, I spoke for some time with Matt from Consumer Reports. He works in the auto division, and he filled me in on how Consumer Reports does its research. When CR evaluates products, employees approach the companies as typical consumers. For example, rather than the companies sending CR souped-up ... Continue reading this article…

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The Carnival is Up!

by Flexo

Thanks to pfblogs.org, I realized the Dividend Guy compiled all the submissions and posted the latest Carnival of Personal Finance today! Here are some interesting articles from the Carnival. * Sound Money Tips offers suggestions for online file back-up. I need to rethink (well… develop) a back-up strategy for my documents. * Financial Revolution has ... Continue reading this article…

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