Why Shopping Events Like Prime Day and Black Friday Are So Dangerous

A woman shopping an online sale from her laptop while surrounded by clothes and shoes.

Image source: Getty Images

The average American's credit card balance is $6,194. Maybe that figure is shocking to you. Maybe it's not. But there are different reasons people get into debt, and needless purchases are partly to blame.

That's why mega-shopping events are so problematic. I'm talking about Black Friday, Cyber Monday, and the recent Amazon Prime Day extravaganza, which featured so many thousands of deals, it was overwhelming to keep track. Many consumers look forward to these so-called bargain shopping days, and to be fair, there are deals to be had during these and other shopping events. But there's an inherent problem with these blowout sales: They tempt consumers to spend money they don't have. And that, in turn, can lead to serious problems with credit card debt.

The illusion of savings

Seeing an item that normally retails for $299 on sale for $199 could easily trigger your brain to whip out your credit card and buy it. After all, that's a really good deal and $100 worth of savings, right?

Well, it depends on one key question: Were you going to buy that item in the first place, and was it a necessary purchase? If the item is a piece of furniture you need for your home and you've planned to buy it for months, then sure, snagging it for $100 less is a good thing. But if the item was an electronic device you really don't need and weren't necessarily planning to buy, then guess what? You didn't just save $100; you spent $199, and quite possibly landed yourself in debt because of it. And this is why shopping events like the ones mentioned above are so scary.

The good news is that Prime Day is done for this year, but we still have Black Friday, Cyber Monday, and the general holiday shopping season to contend with. And that's a time of year when a lot of people get into trouble. So as we creep toward that season, do yourself a favor and pledge to avoid those big shopping events, or map out a strategy for approaching them. That strategy should include:

  • Setting a spending budget
  • Making a shopping list
  • Sticking to that shopping list

Furthermore, if you're in debt going into the holiday shopping season, then you may want to avoid buying more things altogether. And if you're worried about the repercussions of not showering friends and family with gifts, you might instead explain that you're trying to pay down a daunting credit card balance and need to dig yourself out of that hole. Hopefully, they'll recognize that taking care of your financial health is more important than gift-giving. (Incidentally, you can also find ways to give gifts on the cheap -- for example, whipping up homemade baked goods and handing them out in festive packaging, or offering to babysit your best friend's kids for a night in lieu of the $40 sweater you can't afford to buy for her.)

Even if you aren't in debt, be careful during big shopping events, because the money you spend on a gadget you don't need could be money for a down payment on a home, or another major financial goal. And those are things you don't want to give up on.

It's all about marketing

The people who came up with Prime Day, Black Friday, and the like are clearly marketing geniuses. But that doesn't mean you have to fall into the trap of spending needlessly. While you may indeed spot some really good deals during these and other shopping events, don't let your fear of missing out on a bargain drive you to poor financial decisions. If you do, you might sorely regret it afterward.

Our credit card expert uses this card, and it could earn you $1,148 (seriously)

As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.

But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.

That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.

The Motley Fool owns and recommends MasterCard and Visa, and recommends American Express. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More