Remember that businesses first want to survive and then to flourish, just like you. The difference is that businesses have armies of people whose goal is for you to buy their product or service.
Through clever marketing many firms have managed to take something that is a cost and sell it to you as a benefit. How upside down is that?
Fake Benefits to avoid
Here are some fake benefit examples:
Overdraft Protection: Banks sell the benefit that “you’ll never bounce a check or have a rejected debit card transaction.” This is not a real benefit compared to the hefty overdraft fees if you make a minor clerical error.
You are better off being a little embarrassed when your transaction is rejected rather than paying $10 – $30 or more per transaction for the bank to clear your overdraft. I’ve heard of cases where people have been charged hundreds of dollars using their debit card to buy small dollar items (such as a bottle of water) not knowing each one was an overdraft.
No Payments for One Year (or more): This is not a benefit! Buying something you can’t afford today is a cost, not a benefit. It’s a benefit for the company because they get to book a sale. You now have this additional debt on your shoulders that you have to remember to pay to avoid hefty interest charges.
72 – 84 month car loan: If you can’t pay off a car loan in 48 or 60 months tops you are buying too much car which will really hurt your finances. Worse yet you are putting yourself in a position to have a higher debt balance than the car is worth, putting you “upside down” on your car.
Dealerships then try to convince you that another benefit is rolling that balance into your next vehicle, which just makes matter worse. The dealerships and finance companies are making money at your expense. Don’t fall for it!
Here are some other Fake Benefits
Electronics warranties: These are huge money makers for the companies selling them. Sounds innocent to pay another $30, $50 or whatever on top of a computer or phone purchase to “protect your investment.” Keep doing this over the years and it will cost your thousands. Most have deductibles anyway so if you have a problem you pay for most of the repair and they keep all of your premiums. They win you lose.
Consider declining and instead put that same amount in your own “self insurance” savings account that you can build up over the years to pay for any electronics repair easily. Keep the money in your pocket not theirs.
Timeshares: Timeshares are often sold using high pressure sales tactics. It’s pitched as a benefit to be part of a vacation club.
I compare this to being in a crummy satellite TV contract, only worse, because timeshares have no expiration because you are the owner. You can’t get out of it unless you find a buyer. You are forced to pay annual maintenance fees as the owner or your credit score is destroyed.
Instead stay a free agent and book vacations where you want, when you want. There are always deals to be had without locking in to a permanent arrangement like a timeshare.
Newly designed car or product: I just heard an advertisement that promotes the company’s vehicle is “newly designed.” This is generally not a benefit other than the look of it.
Anytime a design is new that is high risk due to all the quality issues that are common the first few years of a new design release. You are better off buying a model design that has been out a few years and avoid all the maintenance headaches of a new design.
What other examples can you think of?
If you have any other examples or personal experiences with fake benefits leave us a comment so other readers can see!