Oh, you’re such a TEASE! Mastering teaser rates and more

Do you like to be teased?

If you're seven, probably not.  If you're twenty-seven and with your spouse or significant other … well, I'll leave you two alone. 🙂

Like everything else, it depends completely on the context.  And though businesses don't tease the way a couple of love birds would, they do sweeten the pot a bit to encourage you to pull out your credit card.

Simple Financial Lifestyle (follow him on Twitter) wrote recently about financial teasers.  Although the title says “NO!” the rest of the article says, “Weeelll, let me think about it.”  And that's a great way to approach these kinds of extraordinary offers.

The tease just isn't that teasy after a while

A free month at the gym is great.  Let's say the gym membership costs $40/month.  If you sign a two-year contract, the cost per month is $38.33.  Not a whole lot less than $40.  And that freebie looks a lot more like a trap at month 15 when you might be resenting the fact that you're still paying for that gym membership, even though it's been eight months since you set foot there!

Or a gas station credit card that offers an 8% rebate on gas for the first six months.  Well, after that, it goes down to 1%, which might actually be worse than a decent rewards card.  If that's the only perk the card has going for it, it's not worth the hassle of carrying it.  (“Why do I have this card again?”)

The teaser begins losing its mystique the moment you become a paying customer.  The longer you stay with the service, carry the card, or own the expensive luxury item, the less the teaser matters.  A $40/month gym membership approaches … $40/month.

It's almost as if the business never teased you in the first place.

A practical guide to sorting through these teases

OK, so you saw “DOT COM DOMAINS FOR ONLY $0.99!!!” and you hesitated.  The tease did its job.

What now?  Pretend that the tease doesn't exist.  “These aren't the 99-cent domains you're looking for.”

Because, in the long run, the tease might as well not have existed at all, anyway.

Now that you've strobed the tease out of your mind, look at the deal objectively:

• Where's the fine print?  Think Barry Bonds.  Look for the asterisk on the baseball.  Get your glasses on, and make your best attempt at reading the disclaimers in the fine print that taketh away the good deal that got your attention.
• If it's great cash back you're getting up front, how long does it last for?  It may be permanent, in which case it's not a tease at all!  It's a lasting benefit.  But often, the cash back rate will go down after a few months.
• If it's a low price you're getting up front, when does the price go up?  How long do you have to keep the service once you get past the initial period?
• If it's 0% APR you're getting up front, how long does it last?  What happens if you don't make a payment on time?  (Hint: nothing good.)  What does the rate go up to after 12, 18, however many months, even if you do make on-time payments?
• If it's a free trial you're getting, do you need to supply a credit card number?  (Usually.)  What is the rate after the trial period?  By when do you need to cancel if you don't want to continue?
• If it's 125,000 rewards points you're getting with a new card, what does that buy you, really?  How long do you need to keep the card?  What do need to do with the card after getting it to earn the 125k points?  How long do you have to do these things?

Being teased isn't a bad thing — financially or otherwise — but you should at least know that you're being teased.