Holiday shopping mistakes (and stores) to avoid
Retail gift cards
They might save you from buying the wrong gift, but without the proper research, gift cards could wind up being costlier than you think. Look for expiration dates and purchasing restrictions that might depreciate the value of your gift card. In addition, we recommend taking a look at the merchant's financial standing before buying a gift card from them. One trick: search Google Finance for a store name. If it's publicly traded, and the stock price is $1 or less, you should probably stay away.
Although various consumer groups are petitioning the Federal Trade Commission (FTC) to require that merchants escrow gift card money (and protect the consumer's investment), vendors aren't obligated to honor your gift card if they file for bankruptcy. As a result, a gift card from Walmart or the Apple Store, two stores in good financial shape, is a better choice than one from a store in bad shape. Be wary of Sears/Kmart and Office Depot, which have both recently closed stores. Avoid RadioShack, Pier 1, Design Within Reach, and Rite Aid.
There's one alternative to gift cards that doesn't expire, and it's not likely to go bankrupt. Cash. If it seems crude to give cash, it's cruder to give a gift card from a bankrupt store.
Like gift cards, mail-in rebates could prove problematic if not properly researched. Last month Continental Promotion Group, Inc., one of the country's largest rebate-processing companies, filed for bankruptcy, affecting the payments of thousands of rebates. While rebates make it easier to afford certain items, consumers should investigate who processes their rebate check. Is it coming directly from the manufacturer or is there a fulfillment company, like CPG, involved?
If you're still having trouble obtaining your mail-in rebate, the Consumer Affairs website has a sample "demand letter" you can send to the processing company, the FTC, and Consumer Affairs in an attempt to get your money.
From DVD players to flat-panel TVs, practically all consumer electronics are backed with manufacturer warranties that last anywhere from 90 days to one year. However, many retailers want you to buy extended warranties for your purchases. They'll lure you with promises of free replacements and in-home repairs. But the truth is, you rarely need them, and you can't be sure that you'll be able to use it if the store goes bankrupt. Even if the store is stable, it's in part because extended warranties are a huge profit center. However, if you do sign up for the extended warranty, remember to check when coverage begins and what it doesn't cover. Sometimes what it doesn't cover is more important than what it does.
Credit card debt
As tempting as it may be, putting all of your holiday purchases on your credit card (when you can't immediately pay it off) is the biggest shopping mistake you can commit. In addition to charging you interest, credit cards can quickly become financial burdens that make the holidays into a year-long annoyance.
We usually suggest that you always pay via credit card because of the extra consumer protection it provides over other methods of payment. (For example, you're almost entirely protected from credit card fraud so long as you report it.) However, rather than rack up debt, it may actually be better to pay with cash or a debit card, or to use a layaway plan. (Find out which stores offer the best layaway plans here.) If you can't afford to make your purchases with cash, chances are you shouldn't buy those items in the first place. However, if you must pay with credit, use the card with the lowest interest rate so you can quickly pay off your debt the following months.
High shipping costs
With Christmas a week away, it's easy to fall into a frantic shopping frenzy as you race to complete all of your purchases. But before you pay any absurd overnight shipping fees, take a look at our shipping deadlines to find out what cut off dates you need to be aware of. Also, if you plan accordingly, you might be able to find some excellent last-minute shipping deals on a lot of your online purchase.
Louis Ramirez is dealnews' Features editor.