Tips for Holiday Shopping

1. How to pay? Cash, checks, debit cards, credit cards, cash advances, store cards

Cash

Pay in cash when you don't want to be added to any new mailing lists.
Don't send cash through the mail and don't pay in cash when the merchant has to take future action, such as delivery.
Except for the possibility of being added to mailing lists, a check gives you the same advantages of cash (the purchase is fully paid for when you leave the store) without the risk of carrying cash.

Checks

Use a check when you don't want to carry cash, take the risk of a stolen debit card, or take a chance that you won't be able to pay the credit card bill in full when it arrives.
Don't write a check unless the money to cover it is already in your account. If your check bounces, you will have to pay a bounced check fee that might be $15 to $20 or more. The retailer or its check guarantee company may also assess a collection fee.
You may stop payment on a check if you have a dispute with a merchant, but you must act fast, before the check clears.

Debit cards

Use a debit card only if you don't like to write checks or carry cash, and don't think that you might need to return the goods later.
A debit card takes money right out of your checking account. It is much more like paying with cash than either a check or a credit card.
After you pay by debit card, you can't stop payment the way that you can with a check.
You do not have a right to dispute the payment if the goods are defective, the way that you do with a credit card.

Carrying a debit card is something like carrying a pad of blank, signed checks. If you lose your card, someone who finds it can make purchases up to the full purchase limit (which may be $5,000 per day) or the amount you have in your account, plus any overdraft protection. A person in possession of your debit card doesn't need your PIN or any identification to use that card in some locations.

Issuers of debit cards have voluntarily put caps on your liability for a lost or stolen card - from zero to $50, depending on when you report the card lost or stolen. However, you will have to work with your bank to get the money returned to your account. The two major debit card providers VISA and MasterCard have different voluntary procedures for getting your money back after use of a lost or stolen debit card.

If your card is lost or stolen, report it immediately by phone, then notify the issuer in writing. Keep and compare your debit card receipts with your checking account statements and promptly report any errors.

Credit cards

Credit cards can be good for items that have to be delivered or that might
break down - if you can pay the bill in full when it arrives.
Try to restrict your credit card use to purchases that will allow you to pay
in full when the bill arrives. If you can avoid carrying a balance, then
credit cards are good for:
- large purchases;
- transactions where you pay first and accept delivery later;
- purchases that require future action by the seller such as alteration or installation; and
- items that might break down or contain flaws.
You have extra leverage to return a product if you pay with a credit card. The Fair Credit Billing Act gives you a right to defend against payment of a credit card charge if you show that the merchant failed to resolve a problem with the goods or services unsatisfactorily. This is commonly called the right to "charge-back" a credit card purchase. The charge-back right applies only if the item costs more than $50 and you bought it in your state, within 100 miles of your state, or from the credit card issuer.

Credit Card Cash Advances (Avoid!)

Don't take cash advances on a credit card. It is cheaper to pay by credit card than to take a credit card cash advance. Credit card cash advances are one of the costliest ways to borrow money. There is usually a fee, which may be from 2% to 4% of the amount of the advance. There is also sometimes a higher interest rate on the funds borrowed through a cash advance.

Store Credit Cards

Store charge cards can be expensive if you don't pay the bill in full every month. Store cards usually carry higher interest rates than ordinary credit cards. Most retailers accept ordinary credit cards, so you don't need a store credit card.

Payment methods and privacy

For maximum privacy, pay cash.
Expect to be added to new mailing lists if you pay by check. You can usually remove your name from a mailing list by sending a request, with a copy of the mailing label, to the company that is sending you mail. To reduce the number of new lists you get on, send a request to be omitted from mailing lists to the Mail Preference Service operated by the Direct Marketing Association, a private trade group. This will take you off some, but not all, mailing lists. To get the best results, include all the variations of your name (with and without middle initial, for example) under which you receive mail. Write to: Mail Preference Service, P.O. Box 9008, Farmingdale, New York 117359008.

2. When to pay? Pay now, or pay more later

Say "no thanks" to offers to skip a payment on your credit card or loan.

Some companies mail offers to skip a payment on an existing loan or credit card during the holiday season. Read any invitation to "skip a payment" carefully to see if interest will continue to build up during the skipped period. Skipping a payment generally just means that it will take you longer to pay off the account.

Try to make more than the minimum credit card payment.

Pay each month's credit card balance in full if you can. If you already carry a balance, consider not using your credit cards this holiday season. If you can't pay in full, try to make more than the minimum payment. If you make only the minimum monthly payment, it could take 20 years to pay off a credit card.

"No payments, no interest for six months."

Don't accept this kind of credit unless you can pay it off before the due date. "No payments for six months" or "Zero interest until May 98" offers often require you to pay finance charges from the date of the initial purchase unless, you can pay in full before the end of the "no payments" period. Read the fine print. Don't take the salesperson's word for how this credit works. If you don't understand it the loan contract or agreement, don't sign it.

3. Check sale prices against the competition

Look beyond the word "sale" at the store or in the advertisement. The fine print may say, "Regular? or original? prices may not have resulted in original sales." In other words, the sale price is not 25% less than the price yesterday or last week, but 25% less than an original price that shoppers may never have paid. Check sale prices against the price offered by other sellers.

4. Catalog buying

If you order products by mail, phone, fax, or computer, a Federal Trade Commission rule protects you if the seller can't make delivery within the stated time. The seller must notify you and allow you to cancel the order if a shipment cannot be delivered in the time stated in the catalog or advertisement (or within 30 days, if no time is stated).
If you cancel an order you had paid for by check or money order, the company must credit your account within one billing cycle.
Paying by credit card for catalog orders gives you some extra protection. You can dispute the charge as a billing error if the goods never arrive.

5. On-line buying

On-line buying over the Internet offers convenience but presents some serious pitfalls, including the potential for credit card fraud and the possibility of ordering from a company that doesn't exist.
Shop with companies you know. Before ordering from a new company, ask for a brochure or catalog by mail. Be wary of a company that doesn't have a phone number staffed by people from whom you can get more information. Look at a written description of the company's refund and exchange policy before you buy.
If you order on-line and the goods don't arrive, you have the same rights as if you had ordered by mail or phone.
Protect your personal financial information. Sending a message through the Internet is like sending a postcard. People along the way can read what you send if it is not encrypted. You can't tell whether a site that claims to use encryption software actually does so. If you plan to pay by credit card, consider using the Internet to "window shop," but place your order by phone or fax. Keep a paper copy of your order and confirmation number for your records.
Never give out information such as your credit card number to enter a contest or for any other purpose except payment. Don't answer net-questionnaires or order forms that ask for identifying information such as your social security number, mother's maiden name, or former address.

6. Don't buy the extended warranty

Extended warranties and service contracts are a bad buy. Fewer than 20% of products covered by on extended warranty are ever brought in for repair. Estimates of profit margins on service contracts range from 40% to 77%. Most defects will be revealed in the first 90 days, while the original warranty may still be in effect. Buying products with a solid record of reliability is the best way to avoid breakdowns. The annual Consumer Reports Buying Guide contains repair histories for major brands of home appliances, VCRs, TVs, and some other home electronic equipment. Extended warranties are a profit center and a high-commission item: resist the hard-sell.
If you want extra warranty protection, pay with a credit card that offers to double the manufacturer's warranty. Read the fine print in your credit card agreement to see what you will need to have if you have to make a claim on the credit card extended warranty. Keep the store receipt and the charge card receipt for the purchase. Credit card programs generally extend the manufacturer's warranty up to a maximum of one year.

7. Returns: What to do if you are dissatisfied with your purchase

Always save your receipts or other proof of purchase.
If the product doesn't work as advertised, promptly take it back to the retail seller and ask for a refund or replacement.
If you are still dissatisfied, contact the seller and the manufacturer in writing. Describe the problem and ask for specific action by the company (such as replacement). Be polite but persistent in pursuing your complaint. If you are not satisfied, complain in writing to the local District Attorney's office or consumer affairs office.
Stores are not required by law to accept returns or make refunds if they post a no-refund or return policy. Retailers in California must post a notice stating their refund or no-refund policy, or must allow you to return goods for a refund or exchange with a receipt for seven days after purchase. Items marked "as-is," "no returns accepted," "all sales final," or similar words are exempt from this rule.

8. Don't put your holiday bills "on the house"

Don't put your holiday bills or other debts "on the house." Avoid home equity loans except for specific, planned expenditures, such as tuition or home improvement.
Home equity loans are sometimes promoted for debt consolidation. One reason that these loans may have lower monthly payments than your current bills is that the debt is being stretched out over a much longer time period. On some home equity loans, you pay only interest, and you still owe the full amount borrowed even after you make all the payments.
If you have trouble with your debts, contact the nonprofit consumer credit counseling service in your area to help you budget and to negotiate a payment plan with your creditors.

9. Where to Complain

If you encounter suspicious offerings and activities, contact the California Department of Consumer Affairs at (800) 952-5210. The Department takes complaints on some consumer issues, and refers consumers to other agencies when appropriate.

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