A penny auction site is new way of auctions with a huge awesome twist. Each one starts at $0 or $0.01 and increases by 1 or 2 cents (depending on the site and rules, it can be more or less, but usually by 1 penny) and when the timer runs out, the last bidder gets to buy the product at that discounted price.
As you can expect, the price is extremely low when it’s only going up by a penny. The catch is that the timer resets every time it hits 0, which means other people can bid and bid and keep the auction going. Each bid will also cost you a certain amount of cents (more than 1 penny) and you have to pre-pay for any bids you use.
Some penny auctions have safeguards in place that make sure you never lose any money if you’re smart about it. Those are called buy it now auctions, and although the terms and conditions vary from site to site, the main point is that you can use your lost bids towards the retail purchase of the item you just lost on. That provides a safeguard because as we mentioned earlier, you have to prepay for bids before you start bidding on any penny auction. If you lose, you don’t always get those bids back.