As another Black Friday approaches, it’s time once again to become aware of the consumer “gotchas” that might await as you go about your Christmas shopping. Here are a few tips:
- Don’t use your debit card for all of your purchases. If your purchase exceeds your account balance, most banks process the transaction anyway and then charge an overdraft fee of around $35-40 (most banks used to decline an overdraft transaction). Once you go over, each successive purchase triggers another overdraft charge. You are much better off using a credit card for large gift purchases. Further, credit cards offer greater consumer protection against retail disputes. Try to pay cash for small purchases.
- Be careful of the early-morning door-buster sales. Often, the store only has two or three of the highly-sought toy or electronic item and has just used the promotion to lure people into the store, knowing they will probably buy a lot of full-priced items. If a price seems too good to be true, it usually is.
- Gift cards. If you decide to give a gift card, be sure that it is from a retailer and not one that carries the logo of a credit-card company. The latter type often comes with processing fees, expiration dates, and transaction fees. You might want to give cash instead.
- Avoid extended warranties on electronics and appliances. Retailers push hard for you to add these to your purchase because they get to keep 50% or more of what they charge for them. According to Consumer Reports, products seldom break within the extended-warranty window, and when items do break, the repairs, on average, cost about the same as the extended warranty. If you decide you want an extended warranty, don’t pay more than 20% of the item’s purchase price.
- Keep all of your receipts. It’s generally a good idea to also ask for a gift receipt in case the person who receives the gift needs to return it.
It’s always a good idea to stick to your Christmas list so you don’t overspend. A poll conducted by the Consumer Reports National Researdh Center in October 2008 found that about 12 million Americans had not paid off their previous year’s holiday shopping bills. (Consumer Reports Money Adviser, Dec. 2009). Wow. Have a great holiday, and as always, be careful out there.