Overspending is something we regularly see contributing to debt problems when providing Canadians with credit counselling. That overspending is not always easy to avoid. I recently received a coupon from a popular fast food restaurant for their name brand breakfast sandwich. It had been many years since I had their famous egg muffin sandwich and I decided, “it’s time to get my fix.” Arriving at the order window, I hastily decided to order two sandwiches. The voice from the order panel with all the tempting pictures immediately informed me that to use my coupon I needed to add a beverage and a potato product. By then I could smell the wonderful odour of coffee and fried foods. I was trapped. Reluctantly, I forked over a $20.00 bill and ended up with stuff I didn’t want to eat at a cost far beyond the savings offered by the coupon. “How did that happen?” I asked myself, driving away with care not to spill the two drinks.
Welcome to the world of bundling - a strategy used by corporations to increase their revenue by getting you to agree to purchase services or products that you likely don’t need. Bundling can empty your budget very quickly, lead to mounting debt problems, and eventually you may need professional credit counselling just to get out from under it. Below are the six steps that corporations use to trap you in a bundle of products or services. If you recognize the steps you are more likely a wise and careful consumer.
- Appeal to an initial need. Everyone needs a cell phone, right? But do you need a land line, basic cable with three specialty packages and high speed internet all in one convenient bill for only $225.00 per month? Maybe not! You may need only a cell phone. Once you committed to purchase the item you need beware of:
- The offer to “save more money.” Note--the vendor is not offering to save you money but to charge you more!
- Sometimes vendors highlight services or products (that are unique and really cool) that you don’t generally need or would not ordinarily buy (while emphatically reminding you that you are saving money by bundling).
- Another trick is to redirect your attention away from the total cost of purchase while reminding you what you are saving.
- Lock you in. At this point, you are asked to sign the contract or pay immediately. Once you have paid or agreed to pay, you are far more likely to justify the decision to yourself and accept the deal.
- If you decline or ask to reconsider, they ask you why you are rejecting such a good offer (getting you to explain is a form of social pressure, that does not exist in a “yes or no” situation) this is common when bundling an extended warranty with a purchase.
One aspect of utility bundling is that the extra cost becomes a part of your monthly expenses. Like a leach slowly drawing blood you tend to justify to yourself that the cost is necessary. Credit Canada's credit counselling services are tailored to clients needs so any extra expenses you don't need will be pointed out clearly during your consultations.
I recently met a couple who were struggling to put food on their table. They bought an insurance plan for health care for their pet bundled into a recent veterinary visit. The monthly premiums were literally taking food from their mouths to protect from a potential health crisis for their pet. Credit Canada's credit counselling services can help by showing you how you can adjust your spending without sacrificing what is important to you. I was reminded that the vendor is not concerned with the ethics of the sale. The fast food restaurant did not care that I had purchased half my entire daily recommended caloric intake in one bundled meal. They were just out to make a dollar.