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Cash or credit: How to save this Christmas
By Jackie Pearson
03 December 2008
Shops are full of pre-Christmas bargains this year in an effort to get us spending in spite of continuing economic gloom, but what is the best way to pay – cash or credit? According to the executive director of the National Retailers Association, Richard Evans, this is the toughest Christmas retailers have faced since the early 1990s. As a result the usual Boxing Day bargains have come early this year with snap sales and big discounts aimed at enticing us to keep spending. The big decision for shoppers is whether to pay with cash or a credit card. |
Image by quinn.anya |
SAFETY AND CONVENIENCE
The risks that come with carrying a wallet full of cash through a busy shopping centre are obvious. If you handbag or wallet are stolen, the chances of recovering that cash are pretty well zero. There’s also a limit on what some banks will let you withdraw via ATMs or spend via EFTPOS in any 24 hour period. This can be rather inconvenient if you want to battle the crowds and enjoy the whole Christmas shopping experience once only.
Credit cards are a safer option because if your card is lost or stolen and you report it as quickly as possible you should be protected from liability for unauthorised use. You will usually have no liability for unauthorised transactions made after you report the card lost or where it’s clear that you haven’t contributed to the unauthorised transaction.
However, don’t assume your credit card is fail-safe. For starters if the card provider can prove you contributed to any losses through fraud or by contravening its security requirements, it may attempt to make you liable for transactions, up to your transaction and account limits, made before you notify them that the card is missing.
BEWARE FRAUD
Credit card fraud is on the increase – according to the Australian Bureau of Statistics 383,300 people (2.4% of the population) were victim to credit or bank card fraud in 2007. The internet is increasingly being used to trade in stolen credit card details. So if you are going to use credit for your Christmas shopping, keep your card safe.
NAB has the following tips:
- Make sure your card is signed;
- Never lose sight of it when making a retail transaction to reduce the chances of someone using a device to skim your details
- Look our for suspicious devices on ATMs and pinpads;
- Only shop online at secure websites displaying the padlock at the bottom of your screen; and
- Keep your receipts and check them against statements.
BARGAINING POWER
One advantage of shopping with cold hard cash this year is that many retailers are in the mood to bargain, and if you flash cash, they will gladly drop their prices. Cash gives you more of a chance to negotiate a lower price on the shop floor because cash transactions are free of merchant fees, giving retails an automatic margin to bargain with.
NO DEBT HANGOVER
If you use your credit card responsibly, paying back the whole balance within the interest-free period you can enjoy many advantages including charge back, extended warranty and the generation of loyalty program points.
By far the biggest advantage of shopping with cash is that you won’t end up with a credit card debt if you’re the type of credit card user that pays interest on a carry-over balance. Try to think forward to when your first post-Christmas credit card statement arrives. You don’t want to still be paying off this year’s bill when the decorations go up for Christmas 2009.
If you're in the market for a new credit card make sure you shop around online and compare credit cards which suit your spending type. RateCity has complied features of over 250 credit cards so you can search for the best credit card in one place. See the related links below to find out which one will help you to save this Christmas.
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