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5 tips to keep holiday spending in check

Woman cartrying lots of shopping bags

Last holiday season, 45 percent of shoppers who made a budget exceeded it, according to our holiday poll, and 5 percent went over budget—by a lot. This year, 44 percent of shoppers say getting a good deal is more important than it was last year, and a third say they will be spending less than they did last year.

"As we approach the 2011 winter holidays - the fourth straight season set against a backdrop of economic uncertainly - Americans remain fixated on finances: their own and that of the nation," said Tod Marks, Consumer Reports senior editor and resident shopping expert. "So it’s not surprising that people are even more intent on watching their dollars, shopping on a set budget and, of course, bargain-hunting." Tips to help you stay on budget this holiday season: 1. Pay with cash Shoppers who use credit cards spend more on holiday gifts than those who don’t, we’ve found time and again in our shopper surveys. Stores don’t have to pay a transaction fee for cash purchases, as they do with debit and credit cards, so you might be able to get a discount if you pay with cash, particularly on big-ticket items. Lord & Taylor still accepts personal checks in its branches, and if layaway appeals to you, Kmart, Sears, and Walmart have programs.

2. Use plastic with care Try to resist the temptation to charge more than you can afford or you’ll be nursing a debt hangover long after the holidays are over. Only take the bait for a store credit card and its one-time extra savings if you’re buying something expensive and know you can pay the balance on time and in full. Store credit cards typically carry interest rates of 20 percent or higher. To avoid lowering your credit score, don’t apply for more than one store card in a season.

3. Nix the warranty Our years of surveying consumers have confirmed that extended warranties for most electronics and household appliances aren’t worth the money. Those items usually don’t break during their warranty period, and if they do, the average cost of repair isn’t much more than the cost of an average warranty. And extended warranties often have loopholes, such as not covering problems caused by wear and tear. However, a plan that covers theft or accidental damage might be worth considering for a laptop, netbook, or tablet you’ll use on the go. Also know that some credit-card providers—notably American Express—offer extended warranty protection on products purchased with the card.

4. Ship for free Online shoppers can stay on budget by taking advantage of free shipping offers, many of which are listed at FreeShipping.org. The site also sponsors Free Shipping Day, Dec. 16, one of the last opportunities for online shoppers to get free shipping from popular retailers for delivery by Dec. 24. Merchants who have signed on include the Apple Online Store, Bed Bath & Beyond, Cabela’s, eBags, Kohl’s, Lands’ End, REI, Zales, and Ghirardelli and Godiva chocolatiers.

5. Haggle We’ve said it before, not enough people try their hand at haggling. In one of our recent surveys, shoppers who said they haggled at walk-in stores saved an average of $82. You can also haggle online. Nearly three of five survey respondents were successful in scoring a price break. A third of them negotiated with a retailer by phone vs. 29 percent through e-mails, and 13 percent by online chat.

For more you can read Tips to help you—and your finances—survive the holidays, first published in Consumer Reports Money Advisor, and check out Fewer Consumers Expect A Jolly 2011 Holiday Shopping Season.

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Copyright © 2007-2011 Consumers Union of U.S., Inc. No reproduction in whole or in part without written permission.

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