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The holiday shopping season is upon us, and that means the search for the best deals is on. Some offers are even more attractive when you use a credit card to purchase them, but then again, some circumstances may require you to use cash instead. Determining what is best for you to use depends on your individual financial situation. Here is an overview of when it pays to use a credit card and when to hit the ATM for cash.
Buying Tips: Wrapping paper, greeting cards and other holiday items to buy only at dollar stores
To verify: 29 Ways To Save On Holiday Gifts
Trying to save money? Stick with money
Only 40% of Vacation Buyers Create and Stick to a Vacation Budget. If you’re already struggling to pay off your credit card debt, budgeting and sticking to vacation spending is crucial. There’s no better way to make sure your budget stays intact than to commit to only using cash.
It’s hard to know exactly how much you’re spending when shopping with a credit card. An MIT study from its Sloan School of Management found that buyers can spend up to 100% more with a credit card than with cash.. When you shop with cash, you can see exactly how much you have left after each purchase. Additionally, some local stores may charge a service fee for using a credit card, so using cash bypasses this possibility, saving you money.
Cash also reduces potential security risks, so there is less chance of your identity being stolen while shopping for gifts. If you don’t want to take cash with you, your debit card will give you most of these benefits while ensuring that you only spend the money you have.
Pay off your balance every month? Get a rewards credit card
If you’re someone who barely uses their credit card or diligently pays off their balance each month, this might be the time to take advantage of some credit card benefits while on vacation. Cards like the Discover it® Cash Back card from Discover have no annual fee, give you 5% cash back in different places each quarter and 1% cash back on each purchase. And the Discover it® Cash Back card automatically matches any cash back rewards you’ve earned at the end of your first year. The Chase Freedom Flex℠ also has no annual fee, and it gives you $ 200 after spending $ 500 in the first three months.. If you plan on spending over $ 500 on holiday gifts, with this card you can pocket $ 200 to treat yourself to something special!
Do you want to create credit? Get a prepaid credit card
You can still keep your budget under control, even with a credit card. Cards like the American Express Serve® Cash Back card allow you to prepay your card, so you can set an exact vacation budget in advance, while also collecting 1% cash back when you shop online or at the store. The PayPal Prepaid Mastercard® integrates easily with the PayPal app, while providing you with discounts and offers at select PayPal-accepting stores. In addition to reaping the cash rewards, you are accumulating credit at the same time, so it is easier to apply for a loan or make a large purchase in the future.
Do you plan to do your shopping in one place? Get a credit card in store
If you’ve shopped at a department store, you’ve probably been asked to sign up for a store’s credit card. While you’ve likely turned them down on several occasions, if you are responsible for credit cards and tend to shop from the same store often, a retail credit card can be of tremendous benefit. Some will offer 20% off your entire purchase when you sign up, which can be quite a saving when shopping for gifts or other holiday essentials. Store credit cards also often have loyalty programs built in, where your cash back could become free money for that store. For example, the JCPenney credit card offers 1 point for every dollar spent with the card, and when you get 200 points, you get a $ 10 gift certificate at the store..
Likewise, the Target RedCard gives you 5% off in-store and online purchases, as well as free 2-day shipping on select items. You can also access promotions and extended return periods.
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