Use credit and debit cards wisely this holiday season

Have you started your holiday shopping yet? If you haven’t, you’re not alone. According to a recent Consumer Reports Holiday Shopping Poll, only 22 percent of consumers anticipate finishing holiday shopping right after Thanksgiving, compared to 30 percent in 2006. Forty-five percent of respondents said they do not anticipate finishing their shopping until the second week of December, and 20 percent said they would be pushing it right to December 24th. And approximately 6 percent of respondents are resigned not to complete their shopping until after the holidays.

Nearly one-quarter (23 percent) of our survey’s respondents said they expect to spend less this year than in 2006. If you want to control your spending, consider making a budget before you begin to shop. In our survey, among the 33 percent of consumers who made a budget for last year, 43 percent managed to stay on budget, with only 8 percent going way over budget.

Don't let finance charges and other fees push you over your budget. To keep from spending more than you have to, use the payment method that makes the most sense for you. If you pay off your credit card balance in full each month, charging your holiday gifts won’t cost you anything in finance costs and may even provide a bonus in the form of a cash-back or other type of reward. If you’d rather spend only what you have on hand but don’t wish to carry large amounts of cash, use a debit card. But be aware that if your bank account balance is inadequate to cover your purchase, you can be hit with large overdraft fees. Click here for more on how to decide the best method of payment.