Smart Buying

Penny Auctions Don't Always Add Up

They promise deep discounts, but you rarely win.

In for a penny, in for a pound, goes the saying. That's certainly true with penny auctions. The sites, springing up all over the Web, auction off products from iPads to gift cards, supposedly at discounts up to 99%. Sound too good to be true? You're right.

Here's how it works: The auction price for every item starts at $0, and each bid increases the price by a penny. But you have to pay to bid. Participants in penny auctions register with the site and buy bids that typically range in price from 50 cents to $1 each. Each time you bid, you spend real money, for the chance to be the high bidder. If you win, your cost is the closing price, plus the price of the bids.

In a recent auction on QuiBids.com, a user won an Apple iMac, valued at $1,700, for just $10.79. But the winner had bid 101 times, so the cost was really $71.39. Still, not bad, right? But you could also end up paying more than an item is worth. A 16GB Apple iPad 2 recently sold at Beezid.com for $158.59 -- a steal given the $499 retail price. But the winner had placed 878 bids, at a cost of $412.66. Final price: $571.25.

Time limits on penny auctions are extended with each new bid as the countdown approaches zero -- so the auction can go on and on. Even when you think you've won, another bid comes in and the auction continues. Auctions eventually end with a winner, but "the majority of people don't ever win a product," says Better Business Bureau spokeswoman Becky Maier.

Some sites, such as QuiBids and BidZillion.com, allow you to put your losing bids toward buying the item at the retail price. But some shopping may well turn up a better price elsewhere.

Most Popular

Is the Stock Market a House of Cards?
investing

Is the Stock Market a House of Cards?

The stock market volatility we’ve been experiencing and the apparent disconnect with the broader economy have some investors wondering just that. But …
October 12, 2020
Stock Market Holidays in 2020
Markets

Stock Market Holidays in 2020

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2020.
October 12, 2020
7 Small-Cap Tech Stocks That Pack a Punch
tech stocks

7 Small-Cap Tech Stocks That Pack a Punch

Small-cap technology stocks might be a rollercoaster ride to hold, but their oversized upside potential makes them worth exploring.
October 16, 2020

Recommended

The Ultimate Guide to Amazon Prime Day 2020: When It Starts, the Best and Worst Deals, Competing Events, More
spending

The Ultimate Guide to Amazon Prime Day 2020: When It Starts, the Best and Worst Deals, Competing Events, More

In a first, the giant retailer has pushed Amazon Prime Day this year from July to October, effectively launching the holiday shopping season weeks ear…
October 8, 2020
Retirees' Guide to Giving for the Greatest Impact
Making Your Money Last

Retirees' Guide to Giving for the Greatest Impact

The need for charity is climbing, particularly to combat the rising poverty, hunger and homelessness from the pandemic’s economic fallout. Here's how …
October 7, 2020
13 Smart Ways to Spend $1,000 or More
spending

13 Smart Ways to Spend $1,000 or More

We offer up several ways to get the most bang for your buck whether investing in yourself or others.
October 1, 2020
How to Pick the Right Medicare Plans for You
Healthy Living on a Budget

How to Pick the Right Medicare Plans for You

As you're signing up for Medicare, you must learn the basics of Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and even doug…
September 30, 2020