Create a strategy for how you’ll shop
It goes without saying that a budget will be a key part of your holiday shopping strategy since it can help you determine how much money you can comfortably spend on gifts and other items.
“I like a strategy or a game plan, like a good old fashioned checklist,” Merrick says. “Who you are buying gifts for? What else are you doing this season? Are you throwing a party, are you hosting? Put it all on a list and assign actual dollar amounts [to each]. Add it all up and if it’s too much money then we have to start cutting things.”
Keeping a budget in mind will ensure you don’t end up overspending on unexpected costs since every purchase can add up quicker than you think.
Have a plan for how you’ll pay
It’s also a good idea to determine the best method for paying for items ahead of holiday shopping. Shoppers pretty much have four main payment options: cash, debit cards, credit cards, or buy-now-pay-later. Each option comes with their own set of pros and cons.
“One of the hacks I’m recommending this year is to use good old fashioned cash,” Merrick says. Specifically, she recommends using the “cash in the envelope method” to simultaneously budget your money and have a way to pay.
Additionally, once your cash envelope is empty, you’ll know you’ve maxed out your budget. As Merrick put it, when you’re out of cash, you’re out of cash.
Credit cards are a very popular way to pay for items year-round since many of them carry a variety of rewards and offers. However, using credit cards for holiday shopping can be particularly powerful since you’ll be making purchases you needed to make anyway and earning rewards for it.
“My recommendation for credit cards is always the same, which is that you should only use your credit card if you are a responsible credit cardholder who can pay it back in-full each month, because that is how you can reap rewards from your credit cards.”
There are credit cards that offer things like discounts to retailers, travel credits, return protection, purchase protection, cash back and points.
According to Merrick, a good cash back credit card might earn you between 2% and 6% cash back on your purchases. Typically, the cash back can be redeemed as statement credit, which you can then use to make a payment toward your credit card bill.
Select ranked the Chase Freedom Unlimited® Card as the best cash back credit card since it carries no annual fee and cardholders earn 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% on drugstores and dining at restaurants (including takeout) and 1.5% on all other purchases. The Chase Freedom Flex℠ card is another solid choice since the welcome bonus allows new cardholders to earn $200 cash back after spending $500 on purchases in the first three months from account opening.
Credit cards that offer a 0% intro APR period are advantageous for holiday shopping since you have a certain amount of time to pay off the balance without having to pay interest. Just make sure you make at least the minimum payments on time or you could lose that 0% intro interest rate. Select ranked some of the best 0% APR cards below:
To avoid accidentally making a late or missed payment, take a set-it-and-forget-it approach by setting up autopay so you don’t have to remember to manually make a payment.
Lastly, buy-now-pay-later (BNPL) platforms can also be a tool shoppers use to manage their spending. Essentially, when shoppers make a purchase, they can split up the total into a number of smaller, equal fixed payments on a certain schedule. This is meant to make it feel more affordable. However, keep in mind that you’re borrowing money that you’ll need to eventually pay back in-full. Be award that some BNPL platforms may charge interest or late payment fees, so make sure you read the terms before agreeing to use the service.
Bottom line
The financial component can make holiday shopping feel extra stressful, but shoppers can take a few important steps to get ahead of the overwhelm without breaking the bank. Merrick recommends creating a strategy for what you’re shopping for and then making a budget. She also suggests ways to use cash, credit cards and BNPL platforms to shop responsibly this season.
Of course, shoppers should remember to take caution when using payment methods like a credit card or BNPL platforms since they are spending money they may not have and it must all be paid back eventually.
