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money matters Making a List? Shop smarter this year to avoid a holiday debt hangover by Scott Messenger F OR MANY SHOPPERS, PART OF the holiday tradition is a bad habit begging to be broken. "People have the best inten- tions," says Scott Sanders, director of card services for Bridgewater Bank (which provides the CAA MasterCard). They want to shop early and wisely. Then, "all of a sudden, we're into December. All the [smart] financial things you should be doing take a back seat to 'I need to pick up a present for my mom.'"In other words, "We're in panic mode," says Sanders. Bad decisions can be the result. A recent survey by MasterCard Canada reveals that nearly half of Cana- dians fail to stick to a budget. But the Christmas spend, as Sanders put it, needn't lead to the holiday hangover. It just takes a little planning (which, according to the same survey, only one in 10 do). "You don't have to be perfect with your plan, but you can always improve upon what you're doing," he says. If you haven't been sav- ing for the season, start now with a high-interest savings account. These accounts are liquid but tend to offer higher interest rates than a typical savings account. Set up a monthly deposit based on the previous year's spend- ing. Remove the temptation Don't clean yourself out this Christmas: no last-minute binge shopping. the less technologically inclined, a few basic rules should suffi ce. First, consider your list a binding document, if not a life preserver in the rough seas of the holiday retail experience. Avoid the rush with early-morning or late-evening shopping and never shop at the last minute. In all cases, says Wallis, scrutinize bargains, particularly deferred- payment deals on big-ticket items. Examine terms and do the math. If you're not paying promptly, "be aware that they could cost you higher interest in the long run." Of course, there are alterna- Use credit cards as a payment tool rather than a fi nancing tool. Translation: avoid carrying a balance. to touch the account, says Sanders, by "mak- ing sure it's not one of the accounts you can access from your debit card." Credit cards are also a sound shopping strategy, but "use them as a payment tool as opposed to a financing tool," Sanders advises. Translation: avoid carrying a bal- ance. Holiday shopping is great for racking up card loyalty rewards, including cash, travel and other redeemable points. In addi- tion, some cards include extended warran- ties on purchases – perfect for electronics. Jupiter Images/Getty Images Ken Wallis, Bridgewater Bank manager of customer sales and retention, also sees the value of credit card purchases but offers a cou- ple of safety tips. "I would avoid department store credit cards, which gener- ally have a much higher interest rate," he says. Instead, stick to a single low-interest card. This will make it easier to carefully monitor purchases. "Who doesn't open up their credit card bill, look at the bottom line and think, 'Well, that can't be right!'" says Sanders. But usually it is – you just weren't keeping track. For the smart phone set, there's an app for that (more than one, of course). Better Christmas List (an Apple "staff favourite" for two years running), for example, tracks your budget, recipients, gifts and more. For tives to the holiday hustle, such as shopping online using a low-limit credit card for increased security. Sanders follows this advice himself. "I don't have to leave the house," he says. Or get creative. Does everyone need a pricey gift? Some on your list might be happy with an invitation to dinner, baking, a pic- ture of the family or a donation in their name, which, says Sanders, "seems pretty powerful." Even with a change of habits, your holiday traditions will have just as much impact. And come the new year, your fi nances will look better than ever. LEARN MORE Shop with the CAA MasterCard and earn valuable CAA Dollars, which can be redeemed for AMA products and ser- vices, such as membership and travel. AMARewards.ca/CAAMasterCard WESTWORLD >> NOVEMBER 2011 51

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