This season, deals are readily available for holiday shoppers without the need for extensive searching.
With the alleviation of supply chain strains from the Covid era, a decline in consumer spending has prompted numerous businesses to enhance incentives for purchases. Ted Rossman, senior industry analyst at Bankrate and CreditCards.com, remarked, “This marks the most favorable discounting season in years.”
“Retailers are providing substantial discounts to sell items such as clothing, toys, electronics, and other physical goods,” mentioned Rossman. According to Rossman, discounts starting at 30% off have become the baseline, and they commenced as early as October. However, potential buyers should exercise caution, as some of these discounts may be applied to inflated prices, warned Rossman.
Experts caution that the current advertised deals may not represent the lowest prices offered throughout the year. Furthermore, there is a risk of exceeding your intended budget. “You don’t want to find yourself still paying for this Christmas a year from now,” advised Rossman. To prevent a debt hangover in the new year, consider the following dos and don’ts.
Utilize unused gift cards.
Nearly half of adults, 47%, possess at least one unused gift card, gift voucher, or store credit, with an average value of $187 per person and a nationwide total of $23 billion, as reported by Bankrate. There is no incentive for consumers to retain these gift cards, and some may even have expiration dates. “Locate these gift cards and put them to use,” advised Rossman.
If you don’t wish to use it for yourself, consider using it to purchase a gift for someone else or gifting them the actual gift card. Alternatively, you can sell the card on platforms like CardCash or Raise for 70% or 80% of its value, according to Rossman.
Leverage credit card rewards.
Numerous consumers also possess unredeemed credit card rewards. If you have available cash back rewards, Rossman recommends aiming to redeem them monthly, as their value does not increase over time.
Attempt to combine offers.
Amid a discounting season that exceeds expectations, savvy shoppers can optimize their savings by combining various deals for maximum value. Rossman advises against settling for a brand’s 30% sale alone; instead, explore the possibility of stacking additional discounts.
Consider combining these deals with a credit card that offers rewards such as cash back, airline miles, or other points. However, it’s crucial to plan to pay off the balance in full to avoid accruing interest. Additionally, utilizing a shopping portal like Rakuten or Shop Through Chase can provide access to extra discounts.
Exercise diligence in your shopping choices.
Amid the rush to complete your holiday shopping, you might be susceptible to schemes aimed at pilfering your data and funds. According to Visa Chief Risk Officer Paul Fabara, fraudsters specifically target last-minute shoppers, who may be more susceptible to enticing but deceptive offers. To safeguard yourself, conduct research on less familiar retailer names, ensure the security of the websites you visit, and implement multifactor authentication, prompting you to verify your identity beyond just using a password.
Avoid using credit cards without a clear strategy for paying them off.
The current average credit card interest rate has reached a record 20.72%, as reported by Bankrate. “It’s crucial to steer clear of that post-holiday debt hangover,” emphasized Rossman. Consider opting for cash or debit card transactions where possible to prevent accumulating debts.
If you anticipate that your purchases will require an extended repayment period, adopt a strategic approach. Consider enrolling in a new credit card that mandates a minimum spending threshold to unlock rewards. Alternatively, explore the option of leveraging a 0% balance transfer offer for an existing balance. Rossman suggests, “If it’s funds you were planning to spend anyway, and you can avoid accruing interest, obtaining a new card could prove to be a wise move.”
Avoid using a store card without carefully reviewing the details in the terms and conditions.
Brand-name retail credit cards may offer discounts when making significant purchases at a specific store. However, exercise caution, as these cards often carry exceptionally high interest rates, sometimes exceeding 30%, as noted by Rossman. Additionally, the deal might involve deferred interest, meaning that if you have an outstanding balance when the deal period concludes, you may be charged for the interest that would have otherwise accrued.
Avoid exceeding your budget.
It’s tempting to get carried away in the holiday festivities, but it’s essential to remain mindful of your financial boundaries. Given the ongoing impact of inflation on everyone’s budgets, Rossman suggests having a discussion with friends and family to establish limits on gift giving.
Consider setting a specific dollar limit on gift expenditures or opting for a draw-from-a-hat approach for presents within extended family, rather than buying for each individual, he recommends.
