Holiday Shopping | by Guest Author Linda Stern, Licensed Insolvency Trustee
The Holiday Shopping Season is Nigh
Starting with Black Friday and all the way through Boxing Day, billions of transactions will be processed through credit and debit cards. As we traverse shopping malls and the internet to find the perfect gift for those on our shopping list, the frenzy of holiday shopping leaves many of us less attentive and more prone to careless spending. Yes, this is certainly a time to embrace the spirit of giving. However, it is also a period that screams for mindfulness about our finances, both from a security as well as debt management perspective.
The shopping season is prime hunting season for scammers looking for vulnerable and distracted prey. We should be particularly vigilant for scams at check-outs in the stores as well as on-line.
In stores, you should examine pin pads closely for signs of tampering or absence of a serial number underneath. And it is probably best to avoid private ATM machines. Make your cash withdrawals at bank terminals that have video cameras and other security measures to protect you.
For on-line transactions, the least you can do to ensure secure transactions is to glance at the website’s URL in the address bar to determine if it begin with https://. The “S” before the colon indicates the website owner is operating with a licensed security certificate.
In addition, you should be watchful for phishing scams, prevalent this time of year, like emails from your bank or the CRA asking you to verify your password. Do not click on such links under any circumstance. Neither your bank nor the CRA would ever request this type of information by email.
And finally, create a proper system to retain your receipts so you can validate them against your credit card statement when it arrives. Credit card companies do keep a watchful eye for fraudulent activity on your account. Yet, you will not realize you have been defrauded until you see unknown transactions on your credit card bill.
Credit Card Offers
The holiday shopping season is also when amazing credit card offers seemingly come out of the woodwork, enticing you to spend more. This is when we start receiving invitations to increase our spending limit, get bombarded with no payment financing and attractive deals for department store credit cards. Take a deep breath and vet those loyalty cards and reward programs to ensure they work for you, and not the other way around.
Always remain mindful that, first and foremost, the payment card industry is large and profitable. They got this way because their interest rates are higher than any other debt. To grow their profits, they count on you to carry balances.
Our best advice is to stay clear of new credit card offers unless you are very disciplined about your spending. You can use them to your advantage if you keep a razor sharp focus on your budget and are able to pay off the balance in full when the bill arrives. If you cannot do this, then it will turn into a much more expensive purchase in the long run.
Credit card debt is the most common reasons why people end up in serious financial trouble. The high interest rates make this specific type of debt very difficult to climb out of.
Hidden Costs of Holiday Shopping
Many people completely overlook hidden costs related to holiday shopping, such as those for gift wrapping and shipping. In addition, the holiday season often brings extra costs related to travel, cab rides, babysitters and host gifts. These incidental expenses can add up and they have to come out of somewhere.
People on a fixed incomes must plan for them properly and in advance. This is especially true if you do not receive raises or year-end bonuses to ride them out. Simply placing the charges on a credit card to pay off in the future is not a good idea. This will affect how you manage essential household expenses, like mortgages, rent, food and utilities when the bills arrive.
Cash is King
The best way to manage your holiday shopping is with cash. Start with making up your “nice” list. Beside each name, place a reasonable estimate. You can also include a few “appreciation gifts” for the postman, hairdresser, teachers and trash collectors. Don’t forget to add a line for gift wraps and shipping to keep this realistic.
Once you have a total budget established, withdraw this amount from your bank before venturing to the mall. This will keep you unburdened and free from unmanageable bills in the new year. Cash remains king in the holiday season. Tried, tested and true.
Linda Stern, a Licensed Insolvency Trustee, is a guest blogger for Family and Credit Counselling Services, a blended not-for profit community-based agency offering debt counselling & management as well as family/individual support services within York region.
Wishing you a safe and happy holiday season! If you enjoyed this blog, please consider sharing it.