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It's OK to Use Credit Cards for Holiday Shopping

Used responsibly, credit cards can offer extra benefits and protections for your holiday gift purchases.

American consumers use credit cards more during the month of December than in any other calendar month. The Federal Reserve reported that last December shoppers spent over $851 billion on their credit cards.

Credit cards have a bad reputation, because people tend to spend more than they can afford, and get into financial trouble when the interest starts to rack up.

But when used wisely, credit cards can actually provide consumers with added protections against fraud and theft, and they can extend warranties on purchases. When you're shopping online, your purchases are protected against damaged or missing items. Some credit cards offer price protection, where the card issuer will refund the difference if you find a lower price on a purchase you've already made. You may even be eligible for reimbursement if you want to return an item and the store won't accept it.

The most important thing to consider when using credit cards for your holiday shopping is whether you can pay off the balance within a few months. Otherwise, any savings or special offers you receive for using them will be negated by the interest you'll pay.

When Shopping Online
Pick one credit card to use for online purchases, and don't use a debit card if you can help it. In the event your information is stolen, one card will limit the damage, and funds will be easier to recover with a credit card than with a debit card.

Maximize your rewards by stacking your credit card rewards with an online shopping rewards site like Ebates or Swagbucks.

When Shopping In Stores
Have a plan. Know where the sales are, and know what you need to buy. Retailers offer really low prices on certain items in hopes that you'll shell out for regular priced stuff while you're in the store.

Shop around without all the legwork. Scan barcodes with a mobile barcode scanning app to compare local and online prices on the spot.

Using Credit Cards Safely
Keep your info safe. Put your card back in your wallet after each use, and protect the number from others. Don't hold the card while waiting in line.

Don't leave empty spaces on credit card receipts. Fill in the tip section - write N/A or draw a line if you'll be tipping in cash - and enter the total.

Credit Card Perks
In addition to all the extra protection using a credit card can give you during the holidays, there are promotional interest rates, rewards points and signing bonuses to take advnatage of.

Use a card with 0 percent APR interest on purchases, if one is available. This will give you a few months to pay off the balance.

Register your card for any bonus cash back or rewards promotions during the holiday season. Check your account and make sure your rewards points are posting properly.

American Express has Holiday Picks where you can redeem points for merchandise.

Bank of America WorldPoints Rewards customers can get up to 40 percent off certain gift cards.

Chase's Freedom cardholders are eligible for 5 percent bonus cash back for up to $1,500 in hotel and airline purchases, as well as purchases at Best Buy and Kohl's. Some Ultimate Rewards gift cards are also on sale.

Discover has a 5 percent cash back bonus on online shopping on up to $1,500 in purchases through Dec. 31.

However you plan to do your holiday shopping this year, be wise and protect yourself. Make a budget and stick to it. Track your spending and examine your bank and credit card statements closely.

Lisa December 02, 2012 at 05:46 AM
I used to believe that it was ok to use credit cards during the holiday until I took Financial Peace University course by Dave Ramsey. It is never ok to use a credit card. You pay way more than what you initially purchase. It actually keeps you bound to the credit card company. I highly recommend everyone take this course, it will change your life and your financial outlook!
Dan H. December 03, 2012 at 01:39 PM
Pay off your credit card every month, pay no finance charges, and you pay no more than what you initially purchase. You get the perks and consumer protection, and it just takes a little discipline.
Hipster Kitty December 03, 2012 at 03:31 PM
Do you have a professional source for all of this information, or are you just making it up from your own experience, Sarah?

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