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Holiday shopping tips and the best ways to pay | Part 2

With inflation raising prices across the country, shopping for the holidays may cost more than you think.

GREENSBORO, N.C. — The holiday season is upon us! Not only will families be coming together this year for thanksgiving but Christmas too. With inflation continuing to be a headache thousands of families will use Black Friday to do their holiday shopping. There are tons of deals to go around, from in-store events to online deals on Cyber Monday. Nathan Grant, a senior credit industry analyst with MoneyTips shares some tips on how to shop for the holidays and get the most bang for your buck.

Should you use buy now, pay later options when holiday shopping? 

  • The pros and cons of BNPL payment services Like Affirm or Afterpay:

    • Pro - Allows for flexible weekly payments, often with little to no interest.

    • Pro - Could keep you from leaning on using a credit card instead and paying interest if you carry the balance.

    • Con - Doesn’t seem to help with your credit because buy now, pay later data is not typically reported because non-bank sources typically provide the financing. 

      • The three major credit bureaus have said they’ll start including buy now pay later activity on credit reports eventually, but they still need to rely on the providers for that information, and since it will be a short-term loan, it could actually negatively impact you when it is removed from your reports shortly after it’s paid off.

    • Con - There are fees, sometimes for simply using the service, but especially if you make late payments, so read the fine print so you don’t get charged more and cause potential damage if it does get reported to the bureaus.

    • Con - If you’re leaning on this because you are strapped for cash or struggling in some other ways, it can be riskier because of the late fees and cause complications of their own.

  • Alternatives to BNPL?:

    • Many credit card companies are offering their own Buy Now, Pay Later style offerings:

      • Chase’s “My Chase Plan” for instance, lets you sign up to pay off purchases of $100 or more in monthly installments for a fee but no interest. (It's separate from My Chase Loan, which lets you borrow money against your card's credit limit.)

      • Check with your credit card provider to see if any such options exist for you.

Mobile and Digital wallets- are they safe? 

  • Paying with your phone or a smart device is convenient, but is it secure?

    • Even though the thought of storing information on your phone seems suspicious, it is actually the most secure form of payment.

  • How digital wallets work:

    •  You store your financial information on apps like Paypal, Google Pay, or Apple Pay to name a few examples, and the actual transaction uses what is called tokenization, which means that a unique token is used for each transaction instead of your actual financial information. This is what makes it more secure, since your actual account numbers aren’t being used even if there is a security breach. 

    • This also allows you to use payments like debit with more protections than paying by debit card itself can offer, since credit cards typically have more protections in place than debit.

  • Where can you use them?

    • You can use mobile and digital wallets online where you see the option at checkout, or at any payment terminal that offers NFC “tap-to-pay, from in-store terminals to things like Square reader devices.

How to shop this holiday despite inflation pressures. 

  • Know the best ways to save money:

    • Set a holiday spending budget so you have a cutoff

    • Start shopping early so you’re not buying everything at once, it can add up quickly!

    • Save money elsewhere such as ending unused subscription services and use that towards holiday spending.

  • Choose the best forms of payment: 

    • Credit cards are more secure than debit, and if you use them strategically, you can actually save money this holiday.

      • Only spend on a credit card what you can afford to pay off by the due date.

      • Use specific cards that earn rewards on purchases you are already making. This could be cards that earn cash back on certain categories of purchases, a retailer-specific credit card that provides a discount where you are already planning to shop, or cards that save on gas and groceries so you can apply those savings towards your holiday shopping.

      • If you’re approved for a new credit card with a sign-on bonus or 0% introductory APR, you can use those to your advantage this holiday.

      • Credit card perks like price protection and extended warranties can help you save money this holiday as well, so review your cardholder agreements to see what options might be available to you.

    • Buy Now, Pay Later options could be this year's “Layaway” for making holiday shopping more flexible—if used responsibly.

  • Avoid holiday debt come the new year:

    • Don’t simply lean on credit cards. Avoid using credit for something you know you can’t pay off right away. High-interest debt is the main reason people get stuck in a debt cycle and high balances from holiday shopping could have higher interest rates, especially if you use retail store credit cards which typically have even higher interest rates. Don’t pay it off in full right away and the interest will make it feel impossible to get ahead.

    • The best way to avoid debt is to not use credit cards altogether if you can’t pay in full.

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