Gift giving is a mainstay of the holiday season, as is saddling on more debt. Everyone goes into the holidays with the best intentions, but more often than not they end up overspending.
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While carrying new credit card debt into the New Year is a big financial no no, it’s not the only mistake people make when shopping for their loved ones. From being fooled into thinking you are getting a deal to waiting too long to pounce, here’s a look at six mistakes you need to avoid during the holidays.
Thinking Black Friday has the best savings
Thank the power of marketing for beating it into everyone’s head that they have to get up at 5:00 a.m. on the day after Thanksgiving to get the best holiday deals. It turns out in some cases you’ll end up spending the same as if you slept in. A recent analysis of 27 Black Friday advertisements by NerdWallet www.nerdwallet.com found 25 retailers listed at least one product for the same price they sold it for last year. According to NerdWallet, 93% of retailers are offering the same products and prices from one year to the next. What’s more, the analysis found those deals on Black Friday are offered via sales throughout the year.
Not taking advantage of credit card perks
Americans like to charge, especially during the holidays, yet they often don’t take advantage of some of the features their credit card issuer offers. Lots of credit card companies give consumers extended warranty coverage, price protection and even purchase assurance coverage for free or a nominal fee. “Be aware of the benefits that exist within your wallet,” says Beth Kitchener, business leader at MasterCard USA. “For example, MasterCard (MA) ensures that security measures are always in place – even before you purchase so cardholders can shop with peace of mind this holiday season.”
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Going over budget
Ask any financial expert and they’ll tell you the biggest mistake consumers make during the holidays is spending too much. A great way to prevent that, says Erin Condon, vice president of Upromise by Sallie Mae, the loyalty program and credit card issuer, is to create a budget and actually stick to it. “Calculate how much money you’d feel comfortable spending on holiday gifts. When you have your total, allow yourself an extra 10% in incidental cash,” says Condon. “Record every holiday purchase and be aware of your balance to stay on track.” There are a ton of apps you can download to keep your spending in check. Using cash is also a great way to reign in the spending, since studies have shown that when you spend cash you’re less likely to splurge on things you don’t need.
Opening a store credit card to get a discount
In-store credit cards are available at many retailers and during the holidays they will run promotions to get you to open up an account. While getting 20% off your purchase is great, it’s not good if you are stuck with a high interest rate credit card you can’t pay off. The folks at NerdWallet suggest weighing the pros and cons before opening up that card.
Missing out on free shipping days
Procrastinators are far too familiar with this: it’s a few days before Christmas and you finally get around to shopping online. Because you waited to the last minute you have to spend an arm and a leg to make sure the packages arrive on time. According to Condon, 28% of shoppers purchase all of their gifts the night before. A better option is to see when retailers are offering free shipping and take advantage. It may require some dreaded planning but it can go a long way in saving you money.
Ignoring the price matching tools
Thanks to the proliferation of mobile devices and shopping apps you never have to wonder if you could have gotten your purchase for cheaper. Price matching tools are aplenty, yet NerdWallet found 72% of consumers have not used one in the last six months. Instead of leaving money on the table, experts recommend downloading one of these apps, and checking what others are selling it for before buying. If you do find a better price ask if the store you are in will match it. This holiday season Wal-Mart is one example of a retailer that’s committed to matching prices.