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An illustration of a person handing money over in a transaction.
An illustration of a person handing money over in a transaction.
An illustration of a person handing money over in a transaction.

Preparing for next year's holiday shopping.

Published December 28, 2016.

Tips for stress-free holiday shopping.

The season of gift giving happens every year, yet it seems to sneak up on us as if we didn't know it was coming.

While scouring through newspaper ads, price-checking across the web, taking advantage of Cyber Monday online sales, and facing the hordes of shoppers on Black Friday may sound like fun to you, all that holiday spending could be a pain in your budget.

Here are five tips to prepare for your holiday shopping spree:

1. Start getting ready now for next year.

Enough said.

2. Save year-round

Start by grabbing last year's receipts (or making a list of estimates) to determine how much you spent on holiday gifts. Then, divide that amount by the number of months you have to save between now and next holiday season. Put that dollar amount away each month in a savings account, where it can even earn dividends.

For example, if you plan to spend $600 on gifts and you have 12 months to save, transfer $50 from each month's paycheck to a designated savings account. Use your financial institution's online banking system to set up automatic transfers so you can set it and forget it.
Pre-holiday saving helps you to avoid charging everything on your credit cards. Or, if you like using your credit cards to earn rewards points or discounts, your pre-holiday saving allows you to pay off your card balance right away and avoid interest charges.

3. Use department store credit cards wisely

You see the offers all the time: Sign up today for a department store's credit card and receive 10% or more off your purchase! While the discount may seem attractive, the stores (and the banks financing these cards) are counting on you to not pay off the balance. Many store cards carry interest rates up to 29.99% APR! At those rates, the 10% you saved on the original purchase will disappear if you don't pay off the credit card balance quickly. In fact, you could end up paying several times the original price if you only pay the minimum amount due each month.

If you must use a credit card, choose one with the lowest possible interest rate, to save on accrued interest charges in the long-run.

Pre-holiday saving helps you to avoid charging everything on your credit cards.

4. Plan your purchases

If possible, decide in advance what you're buying for everyone. Then, research stores and pricing-especially online, where you might receive additional discounts and free shipping (not to mention, saving gas and avoiding the crowds!). Use tools such as Google's "Shopping" search option to compare prices at various online retailers. This can help you get the lowest price, rather than settling for an amount in-store. Some retailers will price-match, but may ask you to verify the competitor's price before discounting the cost.

5. Give the gift of gift cards

While some may consider gift cards impersonal, they do offer the flexibility of letting the recipient choose whatever he or she wants. Gift cards with the most flexibility are those that act like a debit card and aren't tied to any particular store. These usually come with an activation fee (be sure to check for any other potential fees), while store gift cards are limited to that retailer but don't have any fees.

Many stores will have post-holiday sales, sometimes discounting their products even lower than earlier sales. Unless you're worried the store will run out of a must-have item, a gift card might help you stretch your dollars by purchasing right after the holidays.

Most credit card rewards programs will let you redeem your points for gift cards, which you can then use to purchase gifts or give as gifts - letting you keep your money or avoid putting purchases on your credit card.

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