Holiday cheer doesn't come cheap, but shoppers can take a few important steps to celebrate the season without breaking the bank. Financial advisor Kristin Merrick walks us through her best tips and tricks for making the most of your money (for the full interview featured on TODAY, check out the video above).
Create a strategy for how you'll shop
It goes without saying that a budget will be a key part of your holiday shopping strategy since it can help you determine how much money you can comfortably spend on gifts and other items.
"I like a strategy or a game plan, like a good old-fashioned checklist," Merrick says. "Who you are buying gifts for? What else are you doing this season? Are you throwing a party, are you hosting? Put it all on a list and assign actual dollar amounts [to each]. Add it all up and if it's too much money then we have to start cutting things."
Keeping a budget in mind will ensure you don't end up overspending on unexpected costs since every purchase can add up quicker than you think. Need help coming up with a budget? Check out Monarch, one of our favorite budgeting apps.
Monarch
Cost
$8.33/month (billed $99.99 annually); $14.99/month (billed monthly) - get 50% off your first year of Core Plan with code CNBC50
Free trial
7-day free trial is available before subscribing
Standout features
Net worth tracker, investment portfolio tracking, goal creation and progress tracking, budgeting and expense tracking
Categorizes your expenses
Yes, but users can modify
Links to accounts
Yes, bank and credit cards, as well as IRAs, 401(k)s, mortgages and loans
Availability
Offered in both the App Store (for iOS) and on Google Play (for Android); web version also offered
Security features
Utilizes industry-leading security practices, according to Monarch's website
Terms apply.
Have a plan for how you'll pay
It's also a good idea to determine the best method for paying for items ahead of holiday shopping. Here are some tips on how to maximize your money with some of the more popular payment methods.
Cash
If you prefer to pay with cash this year, Merrick recommends using the envelope method. This is where every planned expense in your budget has a dedicated envelope, which you then fill with the appropriate amount of cash (according to your budget). In theory, the physical act of putting cash in the envelope makes it harder for you to overspend. As Merrick put it, when you're out of cash, you're out of cash.
Credit cards
Credit cards are a very popular way to pay for items year-round since many of them carry a variety of rewards and offers. This comes in handy during the holiday season since this is when you're likely to make lots of expensive purchases.
According to Merrick, a good cash-back credit card might earn you between 2% and 6% cash back on your purchases. The cash back can be redeemed as statement credit, which you can then use to make a payment toward your credit card bill.
We ranked the Chase Freedom Unlimited® (see rates and fees) as the best cash-back card that doesn't charge an annual fee. Not only does the card earn solid rewards rates, but it also offers an intro APR on purchases and balance transfers.
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus. Plus, if you pair it with a premium Chase credit card that allows point transfers, you can convert your cash back into flexible travel rewards.
- Users get a high rewards rate and strong welcome bonus
- Purchases and balance transfers receive an intro APR
- No annual fee
- Has a foreign transaction fee
- Few rewarding ongoing benefits
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Enjoy 5% cash back on travel purchased through Chase TravelSM, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
- No minimum to redeem for cash back. You can use points to redeem for cash through an account statement credit or an electronic deposit into an eligible Chase account located in the United States!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.24% - 27.74%.
- No annual fee – You won't have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, in the first 60 days. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3% of each transaction in U.S. dollars
Credit cards that offer a intro APR period (like the Chase Freedom Unlimited) are advantageous for holiday shopping since you have a certain amount of time to pay off the balance without having to pay interest. Some of our other favorites include the cards below:
The Citi Simplicity® Card has amazing intro-APR offers and is particularly valuable for balance transfers due to its lower introductory fee.
- Long intro APR offers for balance transfers
- Low intro-fee for balance transfers
- No annual fee
- No rewards
- No welcome bonus
The Wells Fargo Reflect® Card is one of the absolute best cards you can apply for if you want to save on interest and pay down debit quickly thanks to its extra generous intro-APR offer on purchases and qualifying balance transfers.
- Incredible intro-APR for purchases and qualifying balance transfers
- No annual fee
- Cell phone insurance: up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible
- No rewards
- No welcome bonus
- High balance transfer fee
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. 17.49%, 23.99%, or 28.24% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate, BT fee of 5%, min: $5.
- $0 annual fee.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
- Through My Wells Fargo Deals, you can get access to personalized deals from a variety of merchants. It's an easy way to earn cash back as an account credit when you shop, dine, or enjoy an experience simply by using an eligible Wells Fargo credit card.
Balance transfer fee
5%, min: $5
Foreign transaction fee
3%
To avoid accidentally making a late or missed payment, take a set-it-and-forget-it approach by setting up autopay so you don't have to remember to manually make a payment.
Buy Now Pay Later (BNPL)
Lastly, BNPL platforms can also be a tool shoppers use to manage their spending. Essentially, when shoppers make a purchase, they can split up the total into multiple smaller, equal fixed payments on a certain schedule. This is meant to make it feel more affordable. However, keep in mind that you're borrowing money that you'll need to eventually pay back in full. Be aware that some BNPL platforms may charge interest or late payment fees, so make sure you read the terms before agreeing to use the service.
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