Sara Parker from Utah Central Credit Union has some suggestions to avoid the trap that causes you to spend more than you plan.
1. Use VISA gift cards. VISA gift cards are a great way to shop for the holidays. They will help you stay within your holiday budget because once you determine how much you can spend on gifts, you can buy cards for everyone on your gift list for that exact amount. Not one penny more. And that’s a great way to stay within a budget during the holidays.
The other good thing about VISA gifts cards is they can be used for just about anything – so instead of buying a gift that someone really doesn’t need or that might be returned — give them a VISA gift card and let them buy what they want.
VISA gift cards are also a great way to get all your holiday shopping done in one place — avoiding the long lines at the cash register, the traffic, the parking lot jams, etc. And you will have the satisfaction of getting your shopping done early so you can enjoy the holidays.
2. Get a holiday loan. Holiday loans are a great way to replace the absence of a holiday bonus or perhaps bridge the gap between pay periods – and help you manage expenses during the holidays. At Utah Central, for example, you can borrow up to $5,000 at rates as low as 6.9% and not make your first payment until January. Most holiday loans are for 12 month terms so you have plenty of time to pay them off.
Something else that makes holiday loans attractive – they are cheaper than high interest rate credit cards.
It’s much smarter to get a holiday loan at 6.9% then pay off credit card debt which is usually about 18-21% or maybe as high as 30%.
One low monthly payment is a simple and economical alternative to multiple payments on high interest credit cards.
Comparison of paying back $1,000 charged on your credit card versus $1,000 from a holiday loan:
If you borrowed $1,000 on a holiday loan and paid it over 12 months, your total payment would be $1,000 plus $37.63 in interest — at a rate of 6.9%. If you charged $1,000 in holiday gifts to a high rate credit card – say one that charged almost 20% — and many of them do – you would pay the $1,000 plus $110.79 in interest – or a difference of $73.16.
If you have a credit card that charges 30%, you’d be paying $169.27 in interest – 425% more than the $37.44 on a holiday loan. So you can see why a holiday loan makes better financial sense.
You might keep your credit card interest payments low if your credit union or bank offers fixed rates on their VISA cards – which Utah Central Credit Union does. A lower rate credit card is tied to your credit score so if you have good credit you might qualify. Utah Central offers a platinum VISA at 9.75% to members with good credit and those who use several other services.
Another way to save money is to shop the sales. This is a partial list of some of the bargains that will be out there this holiday season.
1. KB Toys, at the Outlets in Park City (Factory Store in Park City: (6699 North Landmark Drive, park City off I-80) The nation’s largest mall-based specialty toy retailer, will open its Park City store (one of 270 of their 460 stores nationwide) at midnight on Black Friday to give guests the opportunity to beat the traditional post-Thanksgiving shopping frenzy. Special Doorbuster deals and Bonus Offers will be available from the stroke of Midnight in these stores until noon — everything from stocking stuffers to that special hard to find gift, many at steep discounts off of their normal prices; hundreds of toys, games, crafts, video games and family entertainment DVDs.
2. Overstock.com: Headquartered in Salt Lake City, they will have some great deals on furniture, plasma LCD consoles, flat screen TV consoles, mirror jewelry armoires, eliptical workout machines, rolling laptop briefcases, acoustic guitar kit for kids and a Stuhrling Original Cuvette Automatic Date Watch with alligator embossed leather.
And at the Big Boxes:
3. Wal-Mart What’s likely to be on sale? Everything. The retailer will be cutting prices early and often this season — like the $10 toy deal they announced at the start of October. Expect laptops in the $299 range, popular video games for $10 and toys for practically nothing. WalMart’s biggest sales for Black Friday 2008 will be toys and electronics. Listed below are electronics, TVs and other Black Friday sales. 50-inch widescreen plasma high-definition TV at $1397, RCA 46-inch widescreen LCD high-def TV is $1,196, Polaroid 42-inch widescreen 1080p LCD high-def TV $798 and a Sanyo 37-inch widescreen LCD high-def TV at $847. Apple 80GB iPod Classic is 247.88, assorted DVDs for $2.96, Dell Inspiron 1501 15.4-inch laptop computer is $598, Kodak 7MP digital camera at $89.84 and Xbox 360 arcade console system with 5 bonus games for $279.92.
4. Target. Target will continue to draw in customers with low prices on apparel, DVDs (including TV box sets) as well as toys and videogames. The chain will have a few deals on electronics, but the bulk of their low-priced items will be on low-cost items for holiday shopping. 50% off on gold and silver jewelry, board games, merino wool sweaters, DVDs, toaster ovens and sheets.
5. Kmart. Traditionally Kmart has used Black Friday to move kid’s clothes and those prepackaged Christmas gifts you end up buying on the way to a gift exchange you forgot about, so expect extra discounts like last year’s 10% off all apparel. If the past is any indicator, shoppers can expect to see great deals on board games — buy one, get one — and other toys. And cheap, cheap electronics.
6. Toys R Us What’s likely to be on sale: Young kid’s toys and video games will dominate the ads this fall. Also look for Toys R Us to be pushing lead-free and U.S.-made toys. There will definitely be rock bottom prices to aim for consumer’s shrinking disposable income. Many BOGO and B2G1 sales will bring in shoppers with young children at home who still expect Santa to shower them with presents.
Here’s a list of the “top toy trends” released by Toys R Us for the holidays (October, 2008):
• Savvy Savers
• Adorable Animatronics
• Curious Kids
• Earth-Friendly Fun
• Music: My Way
7. Amazon.com. Dealnews.com predicts that consumers will see amazing prices on home and garden items as well as tools and hardware. Due to moves Amazon took last year he wouldn’t be surprised to see them beat other retailers prices in the days and weeks leading up to Black Friday. Amazon will use free or cheap shipping and discounts across the board to come out on top of online retailers this Black Friday.
8. Ace Hardware. Sale items: Tools, tools, tools. Some of Ace’s deals have already been leaked and show that accessories are also key this year — like toolboxes. Expect to see door buster deals on power tools and many other practical items for around the house.
Ace will be facing stiff competition this year as the big box chains worry about the bottom line, so expect better-than-usual deals.
9. Best Buy. Even when the economy is doing poor, consumers still want their gadgets
What’s likely to be on sale: HDTVs, laptops, picture frames and GPS. Expect to see extra long lines at Best Buy this year as many first-time Black Friday shoppers looking for new TVs in response to the digital switchover. Dealnews.com predicts that shoppers will find very aggressive pricing on laptops and Blu-Ray players as well as Insignia and Westinghouse HDTVs.
10. Old Navy. Struggling even as consumers head for low-cost brands, down 9% at last check. What’s likely to be on sale: Old Navy typically offers up fewer items than most Black Friday retailers but that the deals will still be plentiful on cold weather clothing. Online discounts may be the best bet, as the parent company just merged all of its brands onto one shopping site. Prediction: Old Navy will draw crowds but it’s not likely the deals will inspire long lines.
11. Circuit City. Samsung 720p plasmas: $699.99 for a 42-inch model, $899.99 for a 50 incher, and while 1080p LCDs are now under $1,000 (in this case a 42-inch Panasonic and a 40-inch Sony each for $899.99). They’re not “I-gotta-stand-in-line prices.” Circuit City also charges $200 more for a 65-inch Mitsubishi 1080p DLP set than Best Buy does for a 60-inch model. You can click here for the full Circuit City Black Friday HDTV ad prices, but online retailers will probably meet or beat these prices soon enough, and you can sleep late after packing all that turkey in.
12. Macy’s: 40-50% off items like appliances, bedding, luggage; 30-50% off on clothing and shoes, holiday ornaments; Special limited, early bird items like men’s alfani suits, portable DVD players, down comforters, and kitchen appliances
Don’t forget travel. Southwest Airlines will offer $50 off all vacation destinations with a coupon code: BLKFRIDAY. Book between 11/8-12/1
The most intriguing on the list is the $avvy Savers category. $avvy Savers focuses on toys that help kids save their allowance as well as budget for a big ticket item that they didn’t get to unwrap on Christmas morning. One favorite: the new Zillions Laser Beam Safe, which sounds an alert if the protective laser beam is broken or a wrong thumbprint is entered. It even comes in pink making it an fun toy for anyone on your gift list. Not only does the safe protect your kid’s money it also provides an opportunity for you to talk to them about the importance of saving.
Another cool toy is the Zillionz Counting Jar which tallies the coins as they are deposited. This is another fun way to demonstrate saving to children and it re-enforces the value of a pocketful of change, which should encourage kids to save more. One of the reviewers mentioned that the only downside was the small size of the jar, but I think a full jar presents the perfect opportunity to teach your kids about a high yield savings account.
If you want to teach your kids about money or open up a conversation about family budgets consider buying the Large Money Savvy Pig Bank. It splits your kid’s savings into four categories; save, spend, donate and invest. This simple breakdown method of saving is a really cool way to talk to your kids about money, and what better time to start them on budgeting than when Christmas money comes in from friends and relatives.
Kids are hearing about the economy from many sources. Giving them a bank, a fun one to boot, is an excellent way to talk to them about what is going on and share age appropriate facts about your family’s situation so they aren’t frightened by what’s going on around them.
For more information, you can contact your local Utah Central Credit Union. You can find the nearest location to you by visiting www.centralrewards.com.