Christmas shopping: Cash or credit card?

Christmas decorations have already started appearing in shop fronts but are we ready for the spending surplus that’s imminent? One thing is for sure, our outgoing expenses will increase as we near December so what is the best way to pay – cash or credit card?

SAFETY AND CONVENIENCE

The risks that come with carrying a wallet full of cash through a busy shopping centre are obvious. If your handbag or wallet are stolen, the chances of recovering that cash are pretty slim. 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 are planning on getting all your shopping done in one day. Which let’s face it, most of us would rather not battle the crowds and get the shopping madness done as quickly as possible.

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.

BARGAINING POWER

One advantage of shopping with cold hard cash is that many retailers will give you a better price for cash, you just have to ask. 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 2014.

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.

Christmas can be a stressful period so make sure you are armed with a savings plan and a budget.

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