Control holiday shopping expenses

December 5, 2010 at 12:00a.m.

When you write about money, ’tis the season to be buried in an avalanche of holiday shopping- and spending-related e-mails. While the sheer volume of messages highlighting survey findings and budget-saving tips is overwhelming, some contain valuable tidbits. Here are some:

Keep credit score in check

If you’re planning to use your credit card this holiday season, consider how purchases may affect your credit score. You certainly don’t want to go over the limit, or charge too much on one card. A tip from the credit bureau TransUnion: Put a Post-It in your pocket: “Before starting your holiday shopping, obtain your credit report and make note of your account balances and available credit. Take a Post-It note, place it on the back of your card and write at the top how much you’ve allocated to spend. Maintain your credit-card account balances below 30 percent of your available credit limits.” (Get your credit report free at http://www.annualcreditreport.com.) An online survey from credit-scoring company FICO found only a sliver of respondents — just 5 percent — use as much as 75 percent or more of their total credit limits over the holidays. Like me, 35 percent of consumers say they charge all of their holiday purchases. I pay mine off come January and save the rewards I earn to redeem gift cards for next Christmas.

Watch out for Red Tuesday

What’s that, you say? Red Tuesday is the phrase coined by the Association of Independent Consumer Credit Counseling Agencies for the day after too much shopping on Black Friday and Cyber Monday. It’s no fun, but sit down before heading out to the stores and take a hard look at your bank balances. Then consider the amount of money coming in between now and when your credit-card bill is due. Ask yourself how much you can really afford to spend.

trim your gift list

According to a recent Visa holiday spending survey, 42 percent of people are considering gift exchanges this year. This is the first time Visa asked this question. But Visa personal-finance expert Jason Alderman said he thinks exchanges (such as drawing names to give one gift rather than buying something for everyone) and other frugal measures are here to stay. “Even as the economy slowly recovers, a lot of the fast-found habits we’ve learned in the last couple, three years we’re keeping,” he said.

New rules for gift cards

Americans plan to spend an average of $145.61 on the plastic presents, up from $139.91 last holiday. Gift cards are topping holiday wish lists for the fourth year in a row, according to the National Retail Federation. Thanks to the CARD Act, there are new rules that make gift cards even more attractive this year, such as cards that can’t expire for at least five years and that carry no inactivity fees for at least 12 months. But it’s still important to read the fine print before you buy. Check out the Federal Reserve’s list of new rules at www.federalreserve.gov/consumerinfo/wyntk_giftcards.htm and Bankrate’s handy chart of gift cards and restrictions featuring 56 retailers, restaurants and bank cards at www.bankrate.com/finance/credit-cards/2010-gift-card-study-results.aspx.

Kara McGuire is a columnist for the Star Tribune in Minneapolis. Readers may send her e-mail at kmcguirestartribune.com or follow her on Twitter kablog.

2010, Star Tribune (Minneapolis)