Saving Money

How Legit are Penny Auctions?

You’ve seen the ads posted online “Ipods for 90% off retail” and “laptops for under $20” how are prices like these possible?

The answer, is Penny Auctions and they’re popping up all over the Internet.

Before you sign-up though I thought I would give you a breakdown on how these sites make money, how you can win more stuff for much less and which site offers you the best deal.

How a Penny Auction Works

Penny auctions work very much like an eBay auction. Items are offered up for users to bid on, with each bid increasing the price of the item until the person with the highest bid is declared the winner. There are 3 key differences though.

1. Obviously as the name suggests, all bids are in increments of a penny.
2. New items are offered up every few hours and are not posted by users.
3. You need to sign up and purchase bids in advance.

Once you have successfully won an auction your account is charged the amount of your final bid plus a shipping cost to ship the item to you. These shipping costs vary depending on the size of the item you have won. Larger items such as a barbecue will cost more to ship than a gift card. The shipping charges are very reasonable and closely reflect the actual shipping fee paid to the postal service, unlike some ebay auctions shipping is not where the auction sites make their money.