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When trying to save money can backfire

Thrifty shoppers are always looking for ways to save money. But... some common efforts to save actually result in wasting money. Changing the way you shop, switching to a different financial service, and other tactics — all under the guise of saving — can be more detrimental than you might think.
Switching banks - the bait: "Why am I paying all these bank account fees? I'm going to switch banks for a free checking account and more ATMs." A problem because: You can easily incur overdraft fees from un-posted or pre-written cheques and from transitioning automatic bill payments and direct deposits. New deposit requirements or availability policies can result in low-balance fees while you learn how to maintain "free" chequing accounts. The solution: Find a bank that offers free checking with no requirements and a ready-made bank "switch kit." Keep your old checking account open for several months until you are certain all automatic payments and cheques have cleared.
Spending for Rewards - the bait: "I get cash back for things I buy anyway, so I’ll put it on the credit card." A problem because: It's easy to feel compelled to spend more when you think that you're earning rewards. Balances carried over can quickly eclipse rewards as you'll have to pay off interest on your principle balance, and with credit card spending and you will likely have a harder time keeping track of what you are charging. The solution: Stick to your spending budget and always pay off credit card balances before their due date. For rotating rewards categories, spend only in those higher-paying categories (for example, 5% on groceries vs. 1% on gas). Search for a reward credit card with no rewards expiration dates and no annual fees.
Shopping at warehouse clubs – the bait: "Everybody knows that buying bulk results in a lower cost per unit." A problem because: Not every item at a warehouse club is a great deal; many are bundled and packaged specifically for the warehouse clubs. Even though you're buying a cellophane-wrapped crate load of regular-size items that appears to be cheaper overall, you may not be saving much per unit in the end. The solution: Know your grocery store's regular and sale prices, as well as the package sizes of items you buy in bulk at warehouse clubs. Then, do the math to compare the unit price to confirm savings. Make a list of only those warehouse items that save you money and stick to it.
Outlet shopping – the bait: "They sell last season's brand names at a lower price." A problem because: Not everything at the outlets is of the same quality you'd find at a full-price department stores. Manufacturers often produce cheaper goods specifically for outlet stores. Moreover, there are plenty of outlet stores online, and many of them will frequently offer additional promotions that beat the savings of shopping at traditional outlets. The solution: Compare outlet prices with department store prices, and learn the differences between designer or brand name items. When considering an item, look at the fit, stitching, fabrication, and embellishments, as this is where manufacturers tend to cut costs on producing outlet goods. At department stores, you'd do well to shop end-of-season clearance sales and can save a bundle with store coupons.
Using a prepaid debit card – the bait: "My paycheque gets deposited directly onto the card so I can automatically use it and avoid bank fees!" A problem because: The ads makes prepaid debit cards sound easy, but you need to understand the swipe/usage or reload fees, which end up costing more than a "free"chequing account with a debit card. The solution: Read the fine print on these offers and be sure to read through the fee chart. You should consider a free checking account with no requirements instead; it will help you learn to budget your money and track spending better.
Think carefully about the actual costs of your purchases and savings attempts, especially if "saving" costs you upfront.


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