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Debt Rip-Offs: Fingerhut.com

Digital CameraWhenever you hear someone advertising “low monthly payments,” you can bet that the offer is a rip-off.

There’s a new series of TV commercials making the rounds for a website called Fingerhut.com that offers the opportunity to buy thousands of consumer goods with “low monthly payments.” The commercials are creatively produced — featuring characters such as “Maria” and “Maria’s Budget” — but they spread a foolhardy and deceptive message. Fingerhut encourages people to blow their budgets and borrow money to buy overpriced consumer goods that they can’t afford. In other words: Fingerhut is a rip-off.

If you’ve followed this site for any length of time, you probably know where we stand on debt: Debt is financial slavery, and it’s never a good idea to use borrowed money to buy consumer goods (or even big things like cars and college educations). Unfortunately, too many families in our society are saddled with credit card balances and other costly consumer debt that limits their ability to build wealth or give generously. In recent weeks, we’ve been shedding light on the practice of Despicable Debt, predatory lending designed to trap poor-people in never-ending cycles of debt. Fingerhut doesn’t go quite that far, but it’s dangerously close.

So how does Fingerhut do it? If you’ve seen their commercials, then you’ll recognize the pitch. A regular consumer sits on camera next to their “budget” (a large, intimidating actor), describing how  their budget used to control them. But then they found Fingerhut.com, a great site where they could buy thousands of great consumer goods, all with “low monthly payments.” They then go on to describe some of the exciting items they got — a laptop, new kitchen equipment, designer clothes, etc. The message is clear: Don’t let your budget be your boss. Shop with Fingerhut.com to get credit to buy all of the discretionary consumer goods that you deserve.

That’s the pitch; now let’s talk about the reality. Fingerhut is encouraging American consumers to toss responsibility out the window and buy goods that they can’t afford with money they don’t have. The company gives buyers credit online so that they can borrow money for these purchases. But the deal is exploitative: The prices are much higher than those of other retails, and interest rates on the loans are much higher than normal credit card rates would be.

Fingerhut.com does stock thousands of consumer goods (an extension of the mail catalog business that the company ran for years). But they sell them at much higher prices than other online retailers. Here’s a solid example: Fingerhut sells this Canon digitial camera for $669.99. Meanwhile, the same camera is available at Bestbuy.com for $449.99 — a staggering 33% below Fingerhut’s price.

The situation gets worse when you look at the terms of the loans. While interest rates vary based on a borrower’s credit rating, it’s not uncommon for a Fingerhut customer to pay interest rates of 18% or more on those “low monthly payments” — far more than if they had put those same purchases on a credit card. That means that the already-overpriced items become shockingly more expensive once you factor in interest on the loans. All of the sudden, that camera that costs $450 at Best Buy costs far over $700 at Fingerhut.com. In other words: Fingerhut is a total rip-off.

It’s easy to see what a bad deal Fingerhut is financially. But what really upsets me is the way that they’re going about marketing their business. This company’s ads are making a mockery of financial responsibility. Their commercials portray personal budgets as villains; in truth, a good budget is probably the best financial friend that you could ever have. And they encourage people that don’t have the means to buy goods with cash to take out loans instead. They participate in perpetuating the lie that people “deserve” to have nice stuff. But that is total fraud: The only things that you deserve to have are the things that you can use cash to pay for.

Unfortunately, the people that end up using Fingerhut are folks that have little financial literacy and few other options. If you have money, there’s no need to use credit to buy consumer goods (even for Christmas). And even if you qualify for a credit card (which we’re not recommending), you won’t need to borrow directly from a site like Fingerhut. So the people who end up using this site are folks who are already deeply in debt, with all of their credit cards maxed out. They’re in a financial bind, but they haven’t figured out that the only way out is to stop spending. Instead, they just find new ways to borrow.

Fingerhut.com is a total rip-off, and one that you should unquestionably stay away from. Their message is part of a great lie that has created a culture of debt, overspending and conspicuous consumption. And their product is aimed at people who have credit problems and spending problems.

Remember, the only good way to buy stuff is to pay for it outright. Fingerhut and sites like it are peddling a lie — one that will do you nothing but harm in the long run.

——

Photo by DoodleDeMoon. Used under Creative Commons License.

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Comments

  1. I stumbled across your blog and saw this post. I have to disagree with your perspective — you say Fingerhut is a rip-off but pawnshops are ok? The imputed interest rate in a pawn shop is far higher than what Fingerhut is charging. Further, if you pay off the pawnshop you get no benefit on your credit rating like you would with Fingerhut.

    Further, you are judging the purchases of consumer based on your values and needs. In addition to selling items like cameras, Fingerhut also sells items like air conditioners, heaters, etc. — basic essentials. If you live in Houston, Texas in August and your a/c breaks down, and you have poor credit (for whatever reason — medical bills, lost job, irresponsible borrowing, etc.), you should not borrow from Fingerhut to get a replacement because it’s “slavery”?? But its ok to go to the pawnshop and pawn your engagement ring, and pay a higher interest rate to recover it?

    Responsible lending and borrowing is a good thing. Customers who go to Fingerhut go there because they have damaged credit. This is a far superior option for folks than payday lenders, pawnshops, rent-to-own or other predatory lenders. And if individuals are willing to spend a little more to put a smile on someone’s face at Christmas, making them and their friends and family a bit happier, so be it. I am not willing to judge them like you are.

    • I think our disagreement boils down to a fundamental point of financial principle — you believe that “responsible borrowing and lending is a good thing,” while I believe that all debt is slavery. I say this based on both Biblical teaching and simple math. This culture of borrowing and lending that we live in has got the average American family drowning in a sea of credit card, student loans, car payments and other consumer debt. We’re not saving enough, we can’t afford our health care, and we’re ill-prepared for retirement — all because companies like Fingerhut encourage us to spend too much on items that we don’t need and to use debt to pay for them.

      I’ve been plenty hard on payday lenders and other debt predators in other articles. I let pawn shops off the hook not because of the interest rates (you’re right that they are high), but because there’s no obligation. Pawning doesn’t trap borrowers in a cycle of slavery. IF you pawn an item, you’re not obligated to return a single cent to the lender. You can walk away free from entanglements. And yes, if it was my choice to make, I would sell the engagement ring.

      You seem to think that the fact that Fingerhut sells things like air conditioners makes their whole system okay. But it’s not okay, and they’re certainly not advertising HVAC equipment in their new ad campaign. They’re highlighting discretionary consumer goods, and encouraging cash-strapped people to ignore their budgets and go into debt to get their hands on stuff they want. That’s egregious. Besides, the key to the air conditioner scenario is to have good emergency savings in place to fall back on in case of a major household repair. I had to replace my air conditioner unexpectedly last summer, but thankfully I had saved enough cash to pay for it.

      You end your comment by suggesting that I’m judging people who “are willing to spend a little more to put a smile on someone’s face at Christmas.” I’m not judging them at all (I’m judging the people that use mass media to try to convince them to go into debt for those items). What I am doing is trying to teach them that it’s a bad idea. It may “make them and their friends and family a bit happier” on Christmas Day, but nobody will be happy on the day that the bill comes due.

      P.S. — Bonus points to you, R, if you’ll admit to working for Fingerhut or one of their agents. Bet you won’t. 😉

  2. If you go to Fingerhut and search for an iPhone in there, an iPhone 6 in Apple store costs $749 for a 16GB version Unlocked.. But in Fingerhut will cost $1689.99.. At that price you can get already an iPhone 6 Plus and a Galaxy S5 or a Two iPhone 6 for a price of $1689.99 if you buy it from Apple Store, OR buy iPhone 6 from Apple Store and the rest money spend it for a Carribean Vacation for a %1689.99. but if you buy it from Fingerhut you would get the exact thing that is in the Apple store but in a HIgher Price…. FOR NO REASON… a HIGHER PRICE FOR NO REASON….

    • Now I see for an iphone 6 they went down to 1.2k. Still expensive as heck and on Amazon it cost 719 for an unlocked phone, I would of used my fingerhut credit if they sold it for a reasonable price (like 750). But noooo, they have to charge in the thousands to get that O.N.E desperate soul to buy from them.

  3. almightymega says:

    New?? Where have you been for the past 20 years? Under a rock, blindfolded and gagged? ANd, just so you know, there are idiots sending out credit card scams with $250 yearly dues and 36% interest rates. You sir/madam, strike me as a complete idiot with no knowledge of the outside world!

    • Three things:

      1) This article was written two years ago, when the ad campaign in question was indeed “new.”

      2) Yes, there are some terrible credit card rip-offs out there that take advantage of people as well. I’be been plenty hard on those companies in other articles.

      3) Your final statement, calling me “a complete idiot with no knowledge of the outside world,” is ridiculous. This kind of unnecessary venom only reflects poorly on you, making you seem like an angry troll.

  4. I really fail to understand how Fingerhut sells junk when they sell the exact same items as Wal-Mart and Target. Furthermore Fingerhut does not make the products, they only sell the products; so if they are carp it’s the manufactures producing items; not the retailer’s selling the items. Also for those who say that Fingerhut is taking advantage of the poor. When you get Wal-Mart or Target credit cards you will be paying the same ridiculous amount of money for the item you purchased when you get finished paying over time; just like Fingerhut. Bottom line is you may pay less initially, but by the time you get finished paying you Wal-Mart or Target credit card you would have paid just as much, if not more, than what you would have paid at FINGERHUT.

Trackbacks

  1. […] to prey on the poor. Not far behind them are other rip-off agents, including several online operations that offer loans at crazy-high interest rates. Major retail chains and their credit cards are too […]

  2. […] so heinous, but still charge usurious interest rates that constitute massive rip-offs (learn more here, here, here and here). Today we’re introducing a new category of credit products: […]

  3. […] there are many more that stop just sort of despicability: outfits like CashNet USA, MoneyMutual, Fingerhut and others give short-term loans to consumers at incredibly high rates. They’re a special […]

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