The holiday shopping season may look a little different this year, but one thing that hasn't changed is the importance of saving money. Whether you're shopping online or in store, these tips can help you spend less and set you up for long-term financial success.
Know when to use credit or debit.
"The answer to this depends on your individual financial situation," said Shazia Virji, Vice President at Credit Sesame. "Purchasing items with cash or a debit card can help prevent you from overspending or going deeper into debt, but paying with credit now allows you to save your cash for expenses that don't allow you to pay with credit, like rent or loan payments." If you have a credit card that offers reward programs, you may benefit from the additional points and discounts during the holiday shopping season. One of the potential downsides to using your credit is that you may rack up more debt. If you aren't in a position to pay your entire balance each month, you'll likely end up paying more in interest over time.
"Your cash and credit are intertwined when it comes to your overall financial health, so it's important to find a balance between using the two," said Virji. "In fact, Credit Sesame helps emphasize the relationship between the two by rewarding customers with cash rewards when they improve their credit score."
Be aware of the downsides of retailer credit cards.
If you've shopped at a major retail chain or department store, you've likely been asked if you want to save 10 percent on your purchase by applying for their credit card. Before you apply for any credit card, there are a few factors to keep in mind. First, you should make sure that you could pay off the balance in a timely manner.
"Oftentimes, retailer credit cards have higher interest rates and could cost you more in the long run if you don't pay them off in full," said Virji. Another consideration is whether you'd benefit from the perks of having this store credit card. If this is a store you shop at frequently and would use the bonus points and discounts, then it may be a good option for you. It's also important to keep in mind that applying for any credit card may temporarily lower your credit score with a hard inquiry.
Free shipping doesn't always pay off.
You've found the exact gift you're looking for online, and you're ready to check out. Unfortunately, you're about $15 short of the minimum total to qualify for free shipping.
"Don't feel pressured to throw another item in your cart just to save $5.99 on shipping charges," said Virji. "Chances are, you'll end up spending more than you'd save in free shipping for something you didn't need. If you're shopping from multiple online stores, adding a few things here and there can really add up and blow your budget." Instead, try to match up your shopping list to retailers offering promotions that don't require a minimum purchase. Your credit or debit card may also provide exclusive discounts, like Credit Sesame's Cash Back Offers, where you can receive up to 15 percent instant cash back from thousands of national and local retailers on qualifying purchases.
"Remember, you don't need to jeopardize your financial health to show your loved ones that you care this holiday season," said Virji. "By managing your cash and credit together and sticking to a budget, you can buy quality gifts and keep your debt at bay."