In the frenzy of the holidays, even disciplined shoppers might spend too much or make poor gift choices. Steering clear of these common pitfalls can help you get through the season in good cheer and with your finances intact.
When Consumer Reports surveyed Americans before and after the holidays, we found they typically spent more than they'd expected. After the 2009 holiday season, for example, shoppers spent $811 on average—16 percent over budget. So when you're making your gift list, be sure to include such budget busters as postage, packing, tips to service providers, and gifts to hosts.
Free-shipping offers can help online shoppers stay on budget. You'll find offers at www.freeshipping.org. The site also sponsors Free Shipping Day: If you shop at participating online merchants on Dec. 16, your order is shipped free with delivery by Dec. 24. Check at www.freeshippingday.com for participating retailers.
You don't need to line up at midnight on the day after Thanksgiving to get deals. And if you're an early bird or night owl, note that many chain retailers extend their hours and sometimes offer "flash" in-store sales at odd times. Of course, the Internet is open 24/7.
Debit cards can help you stay within your budget, though some banks, such as Bank of America and Wells Fargo, are adding fees for debit-card use for some customers. You won't incur a fee if you pay in cash, and you might even be able to negotiate a discount, because stores don't pay a transaction fee for cash purchases as they do with debit and credit cards. But credit cards give you the best consumer protections—your liability for fraudulent charges on a lost or stolen card is $50.
Bite the bait for a store charge card and its one-time savings only if you can pay the balance on time and in full. Store cards typically carry interest rates of almost 20 percent or higher. Another option is to use layaway, which is offered year-round by Kmart and Sears. Walmart recently launched a holiday layaway program for electronics and toys. All three stores charge a $5 fee for layaway.
Our years of surveying consumers have confirmed that extended warranties for most electronics and household appliances aren't worth the money. When breakdowns occur within the warranty period, the average cost of repair isn't much more than the warranty price.
For computers, however, a plan that extends technical support as well as coverage for repairs might make sense if your gift recipient needs hand-holding after the free factory support expires, usually after a year. And a plan that covers theft or accidental damage might be worth considering for a laptop, netbook, or tablet.
Some credit card issuers, notably American Express, offer free extended warranty protection on products purchased with their card.
Just 13 percent of respondents to our annual survey of electronics shoppers tried price haggling in walk-in stores. But they saved an average of $82. Shoppers saved a median of $105 on televisions, $53 on digital cameras, and $43 on DVD/Blu-ray players. Four in five hagglers negotiated a discount at P.C. Richard & Son, HHGregg, and independent stores. At Sears and Best Buy, at least three in five hagglers had success.
Our survey also found that almost three out of five online electronics shoppers who haggled scored a bargain, though few tried. A third of successful online hagglers negotiated over the phone, compared with over a quarter through e-mail messages and a seventh by using the retailer's online chat.
Four out of 10 consumers named gift cards as their last-minute go-to gift in a 2010 Consumer Reports survey. Our surveys also show that a quarter of people who receive them as holiday gifts have at least one lying around 10 months later.
Federal law now limits gift card issuers' ability to charge certain fees and impose expiration dates. But the rules haven't curbed up-front fees, such as the $2.95 to $6.95 you'll pay to buy an American Express gift card. A Visa gift card from U.S. Bank costs $3.95 from a branch or $6.95 online and has a monthly $2.50 fee after 12 months of inactivity.
The new rules also haven't eliminated the risk to gift-card holders if the issuing business goes belly-up. Even if a retailer agrees to honor its cards during a bankruptcy reorganization or liquidation, card holders might have fewer locations to redeem them or a limited time period.
In our 2010 holiday survey, half of adults said they typically do not check a walk-in store's return policy before buying, and more than a third do not check an online retailer's policy. Merchants usually allow 90 days for returns of most items but might have shorter periods for electronics, software, and CDs and DVDs. Many retailers impose a restocking fee, usually 15 percent of the product's cost. The fees apply mostly to electronics, but Sears also charges for mattresses, built-in appliances, and some special orders.