Holiday shopping is in full swing. We have just experienced Black Friday and are about to have Cyber Monday so the big question on our minds is -- How do we pay for all this shopping?
Which way is best: cash, checks, debit cards, credit cards, cash advances, store credit cards? Let’s take a quick look at each form of payment to discover the best choice for you.
Cash
- Pay in cash when you don't want to be added to any new mailing lists.
- Don't send cash through the mail and don't pay in cash when the merchant has to take future action, such as delivery.
- A check gives you the same advantages of cash without the risk of carrying cash.
Checks
- Use a check when you don't want to take the risk of a stolen debit card or take a chance that you won't be able to pay the credit card bill in full when it arrives.
- You may stop payment on a check if you have a dispute with a merchant, but you must act fast, before the check clears.
Debit cards
- Use a debit card only if you don't like to write checks or carry cash, and don't think that you might need to return the goods later.
- A debit card takes money right out of your checking account. It is much more like paying with cash than either a check or a credit card.
- After you pay by debit card, you can't stop payment the way that you can with a check.
- You do not have a right to dispute the payment if the goods are defective, the way that you do with a credit card.
If your card is lost or stolen, report it immediately by phone, then notify the issuer in writing. Keep and compare your debit card receipts with your checking account statements and promptly report any errors.
Credit cards
- Credit cards can be good for items that have to be delivered or that might
break down - if you can pay the bill in full when it arrives.
- Try to restrict your credit card use to purchases that will allow you to pay
in full when the bill arrives. If you can avoid carrying a balance, then
credit cards are good for:
- large purchases;
- transactions where you pay first and accept delivery later;
- purchases that require future action by the seller such as alteration or installation; and
- items that might break down or contain flaws.
Credit Card Cash Advances (Avoid!)
- Don't take cash advances on a credit card. It is cheaper to pay by credit card than to take a credit card cash advance. Credit card cash advances are one of the costliest ways to borrow money. There is usually a fee, which may be from 2% to 4% of the amount of the advance. There is also sometimes a higher interest rate on the funds borrowed through a cash advance.
Store Credit Cards
- Store charge cards can be expensive if you don't pay the bill in full every month. Store cards usually carry higher interest rates than ordinary credit cards. Most retailers accept ordinary credit cards, so you don't need a store credit card.
Payment methods and privacy
- For maximum privacy, pay cash.
Expect to be added to new mailing lists if you pay by check. You can usually remove your name from a mailing list by sending a request, with a copy of the mailing label, to the company that is sending you mail. To reduce the number of new lists you get on, send a request to be omitted from mailing lists to the Mail Preference Service operated by the Direct Marketing Association, a private trade group. This will take you off some, but not all, mailing lists. To get the best results, include all the variations of your name (with and without middle initial, for example) under which you receive mail. Write to: Mail Preference Service, P.O. Box 9008, Farmingdale, New York 117359008.
For related family economics and consumer topics, contact Margaret at the LSU AgCenter Office located at 511 Roussell Street in Houma or call (985) 873-6495. E-mail questions or comments to MBurlew@agcenter.lsu.edu. In addition, log onto the Family and Consumer Sciences section under the Louisiana Cooperative Extension Service at the LSU AgCenter website: http://www.lsuagcenter.com/.