Holiday shopping hassles

    6 shopping tactics that save money and avoid hassles

    Consumer Reports Money Adviser: November 2012

    This holiday season we might not see the deeply discounted deals we've grown used to over the last few years. "Retailers tell me they don't plan to cut prices as much, and will instead offer giveaways like gift cards to people who pay full price," says Kit Yarrow, a professor of psychology and marketing at Golden Gate University in San Francisco.

    If retail sales lag going into December—and they might, based on our annual holiday polls—stores might still offer discounts to draw shoppers. Last year in early December, for example, 42 percent of adults told us that they had yet to start shopping, which was on par with the previous year's pace.

    But if you wait until late in the season to shop, you might spend more than you planned. "When we shop in a crowd, we get competitive and buy more impulsively," Yarrow says. "There's nothing like the fear of missing out on a deal others are getting that makes people go wiggy."

    To avoid that possibility, arm yourself with the proven strategies we've listed here.

    1. Develop a payment plan

    To save money, consider paying cash for some of the gifts you buy in stores. Over the years our surveys have found that shoppers who use credit cards spend more on holiday gifts than those who don't. "Plastic creates this barrier, so all your focus is on what you're buying, not what you're spending," Yarrow says. Paying cash also gives you some leverage if you'd like to negotiate a better deal.

    But when you're buying an expensive gift or shopping online, credit cards might be your best bet. They allow you to dispute a transaction if something goes wrong with your purchase. Some cards, including all of those offered by American Express, add up to a year to the manufacturer's warranty on products you buy with them. There are limitations on this perk, however, so check your credit-card agreement for details.

    If you use a debit card instead, the cash is deducted from your checking account immediately, and it may be up to you to resolve any problems with the merchant. In addition, Federal protections cap your liability for unauthorized charges on a credit card at $50. With a debit card, your maximum legal liability is $50 if you notify your bank within two business days after discovering an unauthorized transaction. Tell your bank after that and you could lose up to $500, or perhaps much more. Some banks, however, might waive all liability for unauthorized charges.

    You should choose the credit card with the most favorable terms for the items you're purchasing. That might sound obvious, but many of us carry five bank cards or more in our wallets and don't always know the interest rate and terms of each one. And some cards, such as the Chase Freedom and the Discover More, offer 5 percent cash back in categories or at retailers that change every few months. So check your cards' terms to make sure you earn the most rewards you can.

    Take the bait for a store credit card and its one-time extra savings only if you're buying something expensive and know you can pay the balance on time and in full. That's because store cards typically carry higher interest rates than bank-issued ones. But store cards might also offer additional discounts, and gifts purchased with them can sometimes be returned without a receipt. To avoid lowering your credit score, don't apply for more than one store card in a season.

    2. Get organized

    Take the time to write down the names of everyone you want to buy gifts for and how much you can afford to spend on each. Don't dismiss this perennial piece of advice as too simplistic. "From observing shoppers and interviewing them afterward, I can say with certainty that budgets and lists are the No. 1 money-saving holiday-shopping devices," Yarrow says. Skip this step and you're much more likely to make impulse purchases that can really add up. "I watched one woman in a Crate & Barrel grab a bunch of bags of pretzels at the checkout," Yarrow says. "They were on sale, and she thought they'd be a great way to decorate packages. But they ended up costing her $80."

    Add about 10 percent to your spending budget to cover the holiday tips you give to service providers, such as your mailman or hairdresser, as well as gifts for party hosts. And don't forget often-overlooked expenses such as wrapping paper, packing materials, and postage.

    3. Steer clear on online shopping perils

    One way to avoid holiday crowds is to shop online, though most of the seasonal spending is done in stores. "Online purchases go up a bit each year, but they only accounted for 8 percent of all the retail activity during last year's holiday season," says Richard Feinberg, a professor of retail management at Purdue University in West Lafayette, Ind.

    Use caution if you buy online, especially if you plan to shop on auction sites. Some of the most common online schemes include fraudulent auction sales, according to the FBI's Internet Crime Complaint Center (IC3). In one example, Internet criminals post auctions for products they don't have. When they receive an order, they charge the buyer's credit card for it, then use a separate, stolen credit card to pay for it. They pocket the money from the buyer and get the merchant to ship the item directly to the them. IC3 says that when an item is purchased from an online auction but received directly from a merchant, it's a strong indication of fraud. Victims of this scam not only lose the money paid to the con artist, who now has their credit-card information, but also might be liable for receiving stolen goods.

    Shoppers can help avoid these scams and others by not providing financial information directly to a seller and using a payment service like Pay Pal instead. Before you buy, check a seller's rating and feedback; note the number of sales and the dates feedback was posted. Be wary of a seller with 100 percent positive feedback (a sign negative reviews aren't posted), a low total number of feedback posts, or with all of the feedback posted around the same date and time.

    Keep your account and personal information as safe as possible by making sure the security software on your computer is up-to-date. If you're unfamiliar with an online business, research the company by searching for complaints about it online. Also read its privacy policy to find out how the company might use your personal information.

    Don't forget to examine your online shopping cart before you check out. A reader recently alerted us that CompUSA added "free" antivirus software to his cart at check out. The company told us that the software is added to some purchases. But the software is only free for six months. If you don't read the fine print, the credit card you used to make the purchase will be charged $49.99. CompUSA says you'll be notified before that happens. If you shop on a smart phone, you're vulnerable to the same virus, spyware, and phishing threats that can harm your computer. Consider installing security software that detects and removes malware and lets you remotely lock or delete data if your phone is lost.

    Finally, don't shop on a public Wi-Fi network if you'll be revealing user names, passwords, or other personal information that crooks might capture. If you use a wireless Internet connection at home, be sure that the security features are turned on and that you set your own password rather than using a default one.

    4. Cut your shipping charges

    Online shoppers can stay on budget by taking advantage of free shipping offers, many of which are listed at The site also sponsors Free Shipping Day—this year, it's Dec. 17—one of the last opportunities for online shoppers to get free shipping from popular retailers for delivery by Dec. 24. Over 300 merchants had already signed by mid-October, including 1-800-Flowers, Barnes & Noble, Cabela's, Godiva Chocolatier, Home Depot, Kohl's, Lands' End, L.L.Bean, Nordstrom, Office Max, Talbots, and Zales. For more information, go to

    If you have to send something via the U.S. Postal Service and want it to reach its destination by Dec. 25, get parcel post in the mail no later than the second week of December, the USPS suggests. Priority mail should be out by the third week. Express mail should be sent by Dec. 21.

    Keep track of deliveries being sent to your home. Grinchy thieves have been known to follow delivery trucks and grab packages before the real recipients can retrieve them. Not only will you lose your gifts if this happens, but you also might end up the victim of identity theft if the contents of the package includes personal information and account numbers. To be extra safe, require a signature upon delivery or have a neighbor accept packages on your behalf if you aren't home.

    5. Be cautious in pop-up stores

    You've probably noticed empty spaces in malls that are temporarily occupied by merchants specializing in holiday items, like Christmas decorations. These pop-up stores are a growing industry, according to Specialty Retail Report, a trade publication focused on temporary stores. In many instances, they're owned by small businesses, and the Christmas season is their prime time.

    Before you buy from one, weigh the risks. Some well-known retailers, including eBay, Microsoft, and Toys "R" Us, have opened pop-ups at holiday time. But if the store isn't affiliated with a major retailer, you might have little or no recourse if your purchase turns out to be defective. Even if a product has a manufacturer's warranty, you might find that it's valid only if you buy from an authorized retailer, which might not include pop-up stores. And there might be little time to return an item before a pop-up vanishes.

    6. Scope out return policies

    According to our holiday surveys, only a little more than half of adults take the time to investigate the return policy of stores or online retailers when they make purchases. Neglecting to do so can increase the likelihood that you or someone you give a gift to will be unable to return it.

    "Retailers have relaxed their return policies during the holidays in the past, but many of them will be tougher this year," Yarrow says. For example, more retailers will require a receipt to get the full price of a refunded item that's on sale after the holidays. If you try to return something without a receipt you'll probably get only the sale price—if the return is accepted at all. So be sure to include a gift receipt with all the gifts you give.

    Keep your own original receipts, too. If something that you've purchased goes on sale, you can generally get a price adjustment up to two weeks after you bought it, which will come in handy when the holiday bills come due.

    If you're the recipient of a clunker present, check out a store's policy before you try to return it. If the gift was bought online and the merchant has walk-in stores, check the website to see if you can return it at a store instead and avoid repacking, a post-office trip, and shipping fees. And keep in mind that some stores require you to show identification, like a driver's license, when you make a return.

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