Friday, January 20, 2012
Control Your Money - The Dangers of Penny Auctions
OK, I have to say this. I've been seeing a lot of ads for these penny auction sites. You know, the "get a brand new big screen TV ($800 retail) for $23.96" sites. They make it sound so easy to get things so cheap - like it's too good to be true. Well it is.
Here's how it works: you pay to get bids. The price usually comes out at about $0.60 per bid (you buy them in lots of 100 or so). The bids only go up in one penny increments. So that TV that sold for $23.96 required 2,396 bids. At $0.60 per bid, that's $1,437.60 the site made on the TV (plus the $23.96 you paid for it). Somebody's making out like a bandit, but it's not you.
Basically, these sites are gambling sites. You pay money for a chance to "win" stuff. However, just like all gambling places, the house always wins - even if you win the auction. If you lose, well you're just out a few bucks - just like playing the slot machines.
So, here's my view of penny auction sites: Their deals are not deals and there are far more losers than winners.