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Diversify payment methods to avoid holiday debt

December 21, 2012

Holiday shoppers are flocking to malls, big box stores, boutiques and online retailers again this year looking for ideal gifts.

Holiday shoppers are flocking to malls, big box stores, boutiques and online retailers again this year looking for ideal gifts. For many consumers, it’s easy to get caught up in the holiday spirit, and as if caught in a spell from the sugar plum fairy, lose sight of budgets and feasible repayments. Consumers should consider using a variety of payment methods to best stay within a safe realm of holiday spending, matching the type of gift with the type of payment.

Credit is best used for big ticket items such as electronics, keeping in mind to match cards with valuable rewards with these purchases, particularly for in-store holiday sales or rewards such as promotional gifts cards that retailers may offer as incentives to get consumers to spend more during the holiday. Debit cards and mobile pay connect directly to bank accounts, and shoppers should be sure to keep abreast of account balances, setting money aside for automatic recurring billing to pay off debt.

Prepaid credit or debit cards are a good way for shoppers to have the security of a card, but with a finite balance that won’t show up as debt in the new year. Shoppers can prepay whatever budget they can manage, and stick to this card for major mid-price purchases, such as toys and clothing. Keeping debt in check is a way to ensure that the holiday spirit lives on throughout the coming year.

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