05 November 2011
Free Gift Card With Purchase: All The Rage?
Check out any upcoming Black Friday sales, and you'll see many deals such as purchase the XBox 360, and you'll receive a $50 gift card for free. At first glance, this might seem like a great deal, but it's really not! Instead of marking the product on sale, they are getting you to spend more money upfront. Perhaps you would have purchased the gift card separately , so you figure you are getting the same thing with less hassle. In reality though, you're paying extra for that gift card: Normally when you purchase a gift card from a store, the gift card is non-taxable, as you will be paying the tax on any taxable goods when the gift card is used. But by bundling a "free" gift card into a packaged deal, you are now paying sales tax on that gift card. That extra $50 is being taxed twice! In states with a higher sales tax, the extra amount can add up quickly. It's a sneaky way to get you to pay a little more in the store, which pads a store's holiday end of the day sales.
Suddenly, that deal doesn't look quite so good anymore, does it?