Advantages & Disadvantages of Bartering

by Alex Saez, Demand Media

    Bartering is an ancient concept. Before the creation of currency, it was the sole form of purchasing goods and services between individuals. Despite the fact that economics have considerably evolved, bartering is just as legitimate today. Considering the number of expenses you deal with, it never hurts to seek an alternate way to buy without monetary exchange. However, bartering is not completely simple, nor is it always the best choice. Before you decide to enter such a deal with someone, there are some benefits and drawbacks to consider.

    Bartering

    The Internal Revenue Service defines bartering as "the trading of one product or service for another." You may remember doing this during childhood, trading snacks or toys. The same concept applies in adult life, albeit with more valuable products or services. The key difference between bartering and buying is that bartering does not involve a monetary transaction. You simply offer an item you do not want in exchange for something you desire.

    Advantages

    One advantage to bartering is flexibility. You can trade one related product for another -- such as a laptop for a portable tablet -- or two completely different items -- like a television for a lawn mower. You can even save money on travel by trading homes, allowing friends to stay in your residence while you borrow their cottage or house for recreation or proximity. Alternately, you might not even have to part with material possessions, offering maintenance, construction or other services in exchange for material goods or other assistance. Of course, there is the clear advantage of saving money. Not only do you get something you need or want, but neither party has to spend a cent.

    Disadvantages

    While bartering has immediate benefits, it can also cause serious complications. This is especially true if you can't guarantee the trustworthiness of your fellow trader. The other party doesn't require certification or any proof of legitimacy and you don't have a warranty or consumer protection. You may end up trading a good item or service in exchange for a defective or poor one. If this concerns you, limit your exchanges to friends and family. Bartering also requires skill. You may overestimate the value of your desired item and underestimate yours. As a result, the other party could exploit you. To prevent this, focus on related items with similar value -- such as one large appliance for another.

    Resources

    If you want to trade with other people, online bartering sites are a fast way to advertise. Craigslist, for example, is a household name. This site does not specifically focus on bartering, but it does allow people to do so. Other sites are focused on bartering specific items. Home Exchange, for example, allows members -- for a fee -- to exchange homes for the purpose of travel. CouchSurfing provides a similar service without a fee. It also provides safety verification through user testimonies and references. If you wish to barter on clothes, SwapStyle and thredUP allow you to advertise and exchange adult and children's clothing. For items such as movies and video games, sites like SwapAce and GameTZ provide bartering services in that category.

    About the Author

    Alex Saez is a writer who draws much of his information from his professional and academic experience. Saez holds a Bachelor of Arts in English literature from Queen's University and an advanced diploma in business administration, with a focus on human resources, from St. Lawrence College in Kingston, Ontario.