Tips to help holiday shoppers save money and avoid debt this season

Holiday shoppers won’t have to look far to find deals this season.

While Covid-era supply chain strains have eased, consumer spending has declined, prompting many businesses to sweeten incentives to buy.

“This is the best discounting season in years,” said Ted Rossman, senior industry analyst at Bankrate and CreditCards.com.

“Retailers are offering generous discounts to move clothes, toys, electronics and other physical goods,” Rossman said.

Deals offering 30% off have become the floor, and they started as early as October, Rossman noted.

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But buyers beware: Some of those discounts may be offered on inflated prices, he said. Experts say the deals advertised now may not be the best prices offered over the year.

What’s more, you may be at risk for spending more than you intended to.

“You don’t want to be paying off this Christmas a year from now,” Rossman said.

To avoid a debt hangover in the new year, here are some dos and don’ts to keep in mind.

Almost half of adults, 47%, have at least one unused gift card, gift voucher or store credit, with an average value of $187 per person and $23 billion total nationwide, according to Bankrate.

For consumers, there is no incentive to holding on to gift cards. Some may even come with expiration dates.

“Find these gift cards and use them,” Rossman said.

If you don’t want to use it for yourself, consider using it to buy a gift for someone else or gifting them the gift card. Alternatively, you may resell the card on platforms such as CardCash or Raise for 70% or 80% of its value, Rossman said.

Many consumers also have credit card rewards available they have not yet redeemed.

If you have cash back rewards available, aim to redeem them monthly, Rossman said, as they do not get more valuable over time.

With a better than average discounting season in full swing, strategic shoppers can combine deals to get the best value.

Don’t stop at a brand’s 30% sale, Rossman said. You may be able to stack other discounts on top of that.

Try combining those deals with a credit card where you can earn rewards such as cash back, airline miles or other points. Just be sure to plan to pay the balance off in full to avoid interest. Also use a shopping portal such as Rakuten or Shop Through Chase to access additional discounts.

In the haste to get your holiday shopping done, you may be vulnerable to schemes to steal your data and money.

Fraudsters prey on last-minute shoppers, who may be more likely to fall for offers that are too good to be true, Visa Chief Risk Officer Paul Fabara recently told CNBC.com.

To protect yourself, be sure to do some research on less familiar retailer names, make sure any websites you use are secure and use multifactor authentication that prompts you to verify your identify beyond just your password.

The average credit card interest rate is now a record 20.72%, according to Bankrate.

“Avoiding that holiday debt hangover is so important,” Rossman said.

Try sticking to cash or debit card purchases where you can to avoid racking up debts.

If you are making purchases that will take you longer to pay down, be strategic. You may sign up for a new credit card that requires a minimum threshold for new purchases to unlock rewards. Alternatively, you may take advantage of a 0% balance transfer offer on an existing balance.

“If it’s money that you were going to spend anyway, and you’re avoiding interest, getting a new card could actually be really smart,” Rossman said.

Retail brand-name credit cards can provide a discount if you’re making a big purchase at one store.

But be wary: These cards come with the highest interest rates that in some cases are over 30%, Rossman said.

What’s more, the deal may include something called deferred interest. If you still have a balance once the term of the deal runs out, you may be charged for interest that would have otherwise accumulated.

It may be easy to get caught up in the holiday spirit, but don’t forget about your financial limits.

Since inflation is still squeezing everyone’s budgets, it helps to have a conversation with friends and family to set limits on gift giving, Rossman noted.

You may decide to set a dollar limit on gift spending or choose a name out of a hat for gifts for extended family rather than buying for every person, he said.

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