BOSTON – The woman on the phone was questioning my priorities.
"Don't you want to help people do better financially over the holidays? Don't you want to change their habits?"
She was hoping I'd interview a purported "spending expert" on how to be a better shopper for the holidays. To me, most people are expert at spending, and they often get there by the time they reach their teen years.
I not only didn't want to do the interview, but I have gotten to where I hate the whole discussion.
Sure, there's merit to the myriad suggestions for being a better shopper that cross my desk at this time every year, but I have gotten to a point where I believe most of those tips from consumer advocacy and credit-counseling groups are a bit futile.
I can write "make a shopping list, and be sure it fits into your budget" every year, but that's not going to make someone do it. If they haven't taken that step in the past, it's typically not because they don't understand the value of budgeting, any more than someone who could stand to lose some pounds (like me) doesn't understand that they could benefit from dieting.
Instead, they come to smart shopping habits over time, usually when they have some greater personal motivation than a column.
While I love the idea of spending less on seasonal gifts, giving more to charity, finding more great free things to enjoy, spending time and energy on our loved ones instead of parting with cash, and more, I wanted to find holiday spending tips that were a bit different, that maybe wouldn't occur to the typical consumer.
So, make that list, calculate the budget, shop around for good deals, and take advantage of the best sales. But even if you fail to follow that kind of sound thinking in the next few weeks, be sure you at least do the following:
Use the right credit card
For most people, credit serves a purpose. It's not just about expanding buying power, it's also about allowing people to make a bunch of purchases at one time and spread the payback out over time.
While many financial experts loathe credit debt at all, the plain truth remains that the average household credit load is now at nearly $9,000, so it's clear that people use cards whether they should or not.
That said, anyone putting their purchases on plastic needs to pick the card they use carefully.
You might think that the right card is the one with the lowest rate, but for many people, the right card has a lot to do with the way they carry and pay off balances.
Let's say you have a few different credit cards, and you have consolidated some past credit debt using low-rate balance-transfer offers. If you now make purchases on accounts where you made the transfers, your shopping charges will now accrue interest at a higher rate.
Worse yet, the new higher-rate debt sinks to the bottom of the debt pool. If you finish the holiday season with $1,000 in old balance-transfer debt at a rate of 4 percent percent and $1,000 in new purchases at 14 percent, for example, and you make a $500 payment, all of your payment goes to reduce the lowest-rate burden. You've paid off $500 of the low-cost, 4 percent debt, rather than paying off $500 of the new, more-expensive purchases.
That kind of move trades your smart credit deals of the past for high-rate charges tomorrow.
The idea is to come through the holidays with the same rate profile, or a better one, than you have today. The right card, in this case, is one where the new charges enjoy the same rate as your current burden, or a new low-rate card -- if you have offers available -- that gives you the lightest burden, factoring your entire debt situation into the picture.
Know how your debit card works
Many consumers use debit cards to pay for gifts, avoiding credit and the need to pay by check. They may be costing themselves some bucks by not knowing the rules.
At some institutions, declaring your plastic a "debit card" at the checkout counter generates a fee of 50 cents or a dollar per transaction. Typically, an institution that makes that charge will allow you to use the same card as a credit card - withdrawing the money from the exact same account in the same time - at no charge. The only difference is signing the receipt, instead of punching in a code.
Some institutions go exactly the other way, allowing free debit transactions and charging for credit use.
Don't get confused or caught unaware. My two primary bank accounts, for example, have opposite rules, with one charging a fee on debits and the other ticking my account only if I make a credit transaction. Go figure.
These fees add up. A buck on top of your $25 purchase is the same as paying a 4 percent premium for your goods. And if you wind up returning the item, you don't get the fee back.
If you aren't sure of the rules on your debit card, look at your bank statement; if you're still not sure, call the bank and ask. Learning the fee structure and how to keep charges to a minimum will be a gift that keeps on giving.
Understand 'same as cash' deals
If you are offered a payment structure like "90 days, same as cash," ask for the rules you must follow to make it work out the same as cash.
That means paying off the purchase completely by the day the promotional period ends. If you pay off 90 percent of the purchase price when the same-as-cash period ends, you won't be charged interest on what you owe; typically, you'll be charged the full amount of interest you would have owed had you simply made a regular credit deal.
If you can't pay the purchase off in time, it's not "the same as cash," no matter what the signs or the sales staff says.
Protect your credit report, especially if you have big purchases ahead
Many stores offer discounts of 10 percent to 15 percent off your purchases if you sign up for their credit card. There's nothing inherently wrong with those deals, but credit experts warn that what you save today you could lose tomorrow if you expect to be applying for a big-ticket loan.
Each of those new credit accounts represents an inquiry; one or two inquiries in a short stretch of time might not be a big deal, but too many requests will weigh down your credit report and lower your credit score, at least in the short term.
Copyright (c) 2006 MarketWatch, Inc.