Tighter budgets and hard-to-get credit tight have many consumers keeping a particularly watchful eye on the holiday shopping out lays this year. But even the savviest shoppers can be lured by the tricks grinchy companies use to get you to spend more.
The December issue of the Consumer Reports Money Adviser identified six holiday shopping "gotchas":
1). Debit overdraft fees. Twenty percent of the 1,000 people surveyed by CR National Research Center in October 2009 said they were using their debit cards for purchases more than they did a year ago. But even though they can be convenient, you could end up paying more than you expect. For example, banks used to reject a purchase that exceeded the balance in an account. But many will now process the transaction and then charge customers an overdraft charge ranging from $22 to $39 at 16 of the largest banks. Buying several gifts in one shopping trip could result in multiple fees.
How to avoid it: Use a credit card for large gift purchases, especially if you pay your balance in full each month. Credit cards offer greater consumer protections than other forms of payment if your account number falls into the wrong hands. Use a debit card for small purchases if you're relatively certain you won't need the extra protection of a credit card, and you're sure you won't exceed your account balance. Or use cash, keeping in mind that you won't have the leverage that a credit card provides in a dispute.
2) Deep-discount price bait. Many retailers promote deep discounts in "door-buster" sales that usually start in the wee hours of the morning and are on a first-come first-served basis. In a more deceptive version of these sales, an item is advertised at a super-low price on a Web site, but is just a come-on to get you to buy something else and spend much more.
How to avoid it: Be wary of unrealistically low prices when shopping online. Don't buy additional products or services just because you're getting what looks like a good deal on one. To be super-safe, stick with merchants you know. Don't be worried if you miss a great deal if you skip door-buster sales. Last year, CRMA's experts found plenty of so-called one-day sales that were extended.
3) Gift Card Fees. Gift cards can shorten your shopping time, but CRMA's experts generally advise consumers to avoid them. Some come with purchasing and processing fees, expiration dates, transaction fees, and inactivity fees that unfairly diminish their value over time. And the recipient could wind up with a worthless piece of plastic if a company goes out of business or files for bankruptcy protection after you buy its card.
How to avoid it: Consider giving cash instead of a gift cards. If you do buy one, try to stick with those issued by financially sound retailers. Store cards tend to have fewer expiration dates and fees than those issued by banks that bear the logos of credit-card companies like MasterCard or Visa.
4) Return Policy Limitations. Some companies may have different return requirements for items bought in their stores, through their Web site, or by mail order. Kohl's for example, doesn't accept returns by mail if the merchandise was purchased in a store. Many stores track returns, so if the software flags you as someone who has brought back too many items in a short period of time, your return may be denied.
How to avoid it: Ask for a store receipt and a gift receipt for the items you buy. Wrap gifts in their original packaging. Check the rules before you try to return a gift.
5) Restocking Fees. Many items, especially electronics like digital cameras, camcorders, desktops, and laptop computers are subject to a 15 percent to 25 percent restocking fee if they are not returned in a factory-sealed box.
How to avoid it: Don't open a package if you don't want what's inside. Items like computer software, music CDs, and movie DVDs aren't generally returnable after the seal has been broker. If you are slapped with a restocking fee, try to negotiate a partial refund. But you shouldn't have to pay any fee if an item is defective when you unwrap it.
6) Extended warranties. This holiday season shoppers are expected to spend $1.2 billion on extended warranties for electronics and appliances. But extended warranties are notoriously bad deals. Some repairs are already covered by the standard warranty that comes with the product. Consumer Reports' data show that products seldom break within the extended-warranty window -- after the manufacturer's warranty has expired and within the typical two to three years after purchase. And when items do break, the cost repairs, on average tend to cost about the same as an extended warranty.
How to avoid it. Check your credit card agreement before you even consider buying an extended warranty to see if charging an item on your card will provide similar coverage. If you can't rely on your card's additional coverage, and still want an extended warranty for peace of mind, don't pay more than 20 percent of an item's purchase price for one.