tl;dr an amazon credit isn't free money

For those who understand what a credit is can stop reading. I'm referring to store credits, not bank credits (if you know what those are, write a post that explains it better than I can). I'm here to save everyone from their own hubris and, more importantly, poor math skills. The Kotaku Deals post linked to a SodaStream today. I quote:

Amazon is offering a $25 promo credit with select SodaStream makers today, making your effective get-in price as low as $55.

I'm annoyed by the wordage here, because it perpetuates the convincing idea that the credit implies the price itself is lower. The problem with this reasoning is that, while you think you got yourself a sweet SodaStream for 55 bucks, the next time you make a purchase you have that credit sitting, waiting for you, calling for you. You use it when buying another boondoggle and BAM! You saved another 25 bucks. But that is not the case. This is the not the first time I've seen deals implying that a store credit means you have purchased the item at a discount. Let's bust out a whiteboard and get some e-chalk and write this down the way the blogs imply it works.


B+(C)= Y-C = Z

What have we here? Buying A with a C credit gets you A for a price of X (along with the value of the credit)? That means that the purchase of B (with credit) actually brings the price of Y down (retail price for B) to a low, low price of Z. Everybody wins!


Based on how many parentheses I used, it should be clear that this is wrong and stupid. The credit doesn't give both sides handjobs; it must choose one, and here I make my stand. I live in the real world and I like to do my real world transactions as real as they can be. When I buy A with Credit, I assume that I'm paying full price for A with the promise of a discount for B in the future. Flip that around and you get this logic pathway: I buy A with Credit, making it cheaper for me now, and I'll know not to consider the Credit as a discount of a sort in the future, but, in fact, more like a bank loan I need to pay off before I can purchase anything else.

The trade-off in logic makes the latter form confusing and unintuitive. When you try to combine the two, it makes it seem like the credit is being applied both ways, which is simply not true.

I'm not here to say everyone needs to take remedial arithmetic, because math is frankly not the key issue here - this is simply commercial psychology. This "double-credit" phenomena is making you think you're saving twice the money you actually are, and make you looser with your spending habits. I'm sure there's plenty of data supporting my thesis, though I hope a majority of you are with me in comprehending this ruse that is being tactically deployed upon us to make us spend money.


The essay may have gotten a little muddled there, but just understand: know what you're paying for, and what you're paying with. That should clear up any confusions or money misconceptions you may have.

PS If you actually thought you were saving money both ways or thought it was a better deal than it was, get back to me; I'd like to know if I wrote this for someone or for everyone else who also knows what's going on behind their They Live sunglasses.