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CHICAGO (AP) - Black Friday deals are starting early this year, and that
means more pressure to spend, spend, spend.
As the holiday shopping season expands and retailers make
impulse buys ever-easier via smartphone and otherwise, consumers have to be
extra-disciplined to avoid money trouble.
Many are willing to indulge. The National Retail Federation
forecasts holiday sales to rise 4.1 percent to $586.1 billion this year, a
bigger increase than usual over the last 10 years. Shoppers are expected to
spend an average $749.51 in November and December, with many shelling out much
more.
Weak economy? What weak
economy?
Unfortunately, many will
take months to pay off the goodies they bought for loved ones or (shh)
themselves at doorbuster deals and other special offers.
Among the potential debt traps for the
unwary this year:
- Special Black
Friday shopping hours actually begin on Thursday, Nov. 22, at major retailers,
even as early as 8 a.m. on Thanksgiving Day. Ramping up the temptation level,
websites tracking Black Friday sales have been sending emails with "leaked"
sales specials since Halloween.
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Some credit card issuers have mailed blank checks for their customers to use,
just in time for the holiday shopping crush. Interest rates on these cash
advances can run 20 percent or more if you don't pay off your card within the
prescribed period.
- Card issuers
increasingly are attaching spending requirements to generous rewards and bonus
offers they dangle ahead of Black Friday, making you spend with their card in
order to earn them. That's sinking a much bigger hook into the consumer than the
past trend of merchants offering peeks at their sales in exchange for Facebook
"likes."
"Opening a new credit card
just to get a 'deal' is never a good idea," says Jeff Somogyi, an editor at deal
aggregator Dealnews.com. "Getting into a new financial entanglement just to get
a jump on Black Friday sales is probably an even worse idea."
This doesn't mean you have to shun all
holiday sales in order to remain financially responsible.
But remember: Smart spending for the
holidays isn't all about finding the best deals. It's important to be on your
toes to prevent Black Friday and the days surrounding it from dooming you to too
much debt.
Some tips to keep
spending under control and debt, if any, to a minimum:
1. HAVE A PLAN.
Make a list of who you're shopping for, what items you hope
to find and how much you intend to spend on each person. Stick to it! Your plan
should call for you to start your shopping online, at least to compare prices
and look for deals before you head for the stores. Avoid impulse purchases. And
don't wait until the last minute to start shopping; it's a sure prescription to
spend more.
2. LIMIT CREDIT CARD
USE.
Keep the use of credit to a
minimum. If you must use it, put your charges on one credit card - the one with
the lowest rate if you carry a balance. Remove all other cards from your purse
or wallet. Don't apply for store cards just to snag one-time discounts. The
ideal approach it to not charge a single item unless you can repay in full when
your next bill arrives. At least set a target date to zero out the balance
before you run one up.
3. BEWARE OF
SPECIAL CARD OFFERS.
In addition to
rewards and bonus deals, issuers are tempting consumers by offering incentives
such as no-interest balance transfers, extra perks by meeting certain spending
levels and increased cash back in specified categories. Resist the bait.
Companies know that many won't; that's the reason total consumer credit card
debt is close to $600 billion. "No deal is a good deal if you can't afford it,"
says Gail Cunningham of the National Foundation for Credit Counseling.
4. USE LAYAWAY.
Take advantage of the resurgence of
holiday layaway programs. Retailers from Kmart and Sears to Toys R Us and
Wal-Mart have lowered or waived fees this year that shoppers pay to participate
in these interest-free, pay-over-time programs. With stores eager not to lose
customers to the competition, debt-conscious consumers can snag gifts at
attractive prices while not having to pay an extra fee just to avoid buying with
their credit cards.
5. GET
CREATIVE.
Find it difficult to
stick to a holiday spending budget? Give gift cards and make something personal
to go with them. Or give experiences instead of "stuff" - perhaps a shared hike,
nature outing or special home-cooked meal. Or volunteer together at a soup
kitchen, homeless shelter or nursing home if your gift recipient doesn't want
more material items, suggests Pamela Yellen, a financial services consultant and
personal finance author. The gifts people remember the most, as she points, are
often free.
