How to hit the jackpot on Black Friday without ending up in the red

Consumer credit agency TransUnion has warned bargain hunters that Black Friday, taking place this week, can be one of the most dangerous times for poor credit behaviour.

The warning comes as research by the agency into new account openings during the week of Black Friday in 2018. It showed a 37% increase in new accounts and a 21% increase in total credit limits for new credit cards, clothing and retail revolving accounts.

“We found that people were more likely to take out loans and increase their spending limits during Black Friday period,” said TransUnion Africa CEO Lee Naik. This could be one of the more dangerous times of the year for poor credit behaviour if consumers failed to carefully think about their purchases before swiping.

The agency said the majority of growth came from higher-risk loans — there was a 49% increase in retail instalment accounts, which had been used for furniture and electronics.

The research also showed a 30% increase in retail revolving accounts, which had been usually used for electronics, home goods and general appliances.

“I’m a big believer that Black Friday is a marvellous opportunity for retail, but there’s a way to do it wrong and a way to do it right. And I’m not just talking about avoiding frenzied crowds bashing down doors ... I get to see a different picture than most people, and how their spending and lending habits on Black Friday might affect them down the line,” said Naik.

“The problem comes after the madness has worn off. Our data found that six months on, just over half of new retail revolving accounts taken out during Black Friday 2018 were more than one month in arrears.

“So, shoppers beware. That flat-screen TV or PlayStation that’s on special for half the price might seem like a good bargain at the time, but it could lead to some very nasty debt down the road,” said Naik.

The agency offered seven tips for consumers to consider before swiping or spending on Black Friday:

1 Start with a health check, including considering what you already owe, checking your credit report to see whether you have debts you are unaware of. The more you understand your current financial health, the more realistically you can set limits as to what you can afford.

2 Know Your Target. Focus on a few things you need, especially when it comes to big-ticket items like furniture and home appliances. Be ruthless — if you want five things, but can only afford one, rather devote your time, energy on the one thing you need most.

3 Don’t Roll the Dice When it Comes to Price. With your targets set, do the groundwork of what you’re likely to pay. Get a feel for what the products you’re looking for normally cost and what retail sites you might find them on. Go to the online sites and see what the current price is. Knowing the prices beforehand will allow you to sniff out the real bargains.

4 Put Your Chips Aside. Follow the old gambler’s credo of only putting down what you’re willing to lose. Set a maximum spend limit based on your research.

5 Set Your Sights on the Right Sites. Just like there’s nothing more fun than hitting the jackpot, there’s also nothing more annoying than missing out on it because you’re too slow. Let your Black Friday wish list guide you. Bookmark the relevant retail sites and even product listings if you’re looking for a very specific item, to instantly access them on Black Friday. 

6 Think Before You Pay. Before you finalise your shopping cart or head to the till, take one final look at what you’re about to buy. If you’ve done the research, you should have a good feel for what counts as a well-priced item and what you can get for nearly the same price or don’t really need. Pay cash where possible instead of signing up for a new account or charging to your credit card. 

7 Don’t Sweat it if You Don’t Get it. Remember, Black Friday and Cyber Monday are just the start of the festive retail season. Don’t get caught up in the false urgency of times and limited availability. Put your wish list aside until it’s time for summer, Christmas, New Year and end-of-season sales, and then follow these same strategies.