With news of a recession officially announced and the Holiday season in full swing, businesses in every industry are offering tremendous discounts, specifically in the form of direct-mail gift cards.  In the last week I have received 5 discount cards to a variety of stores.  Some require a minimum purchase; others offer percentages off whatever I choose to buy.  Either way, will these cards lead me to buy things I normally wouldn’t?

Possibly. 

One card I got is from Target and offers me $15 off $150 purchase.  I initially thought I’d stock up on staples I regularly get there.  Then it occurred to me that a) where would I keep everything in my tiny apartment and b) do I really want to spend extra money right now?

It’s a dilemma.  Sure, I love a good bargain- who doesn’t?  BUT, if I wasn’t planning on spending the money in the first place, is it really a good idea to do so now?  Probably not.  Economists and public officials are encouraging spending as it will no doubt help the economy.  But fixing the economy will take much more.  Furthermore, how can people spend more when they have less?  Consumers are in a tough position, and these discount cards may actually make them worse off.  In essence it is a bad domino effect:

Receive discount card ‡ spend $ (on credit card, because that cash wasn’t budgeted for) ‡ default on credit card bill ‡ credit crisis worsens.

It is a good idea, however, for stores, because most people love bargains.  They bank on the old “impulse buy” idea; get consumers in and they’ll spend more than they intended.

So while it works for the stores, will it work for you?