Tips to Rein in Online Holiday Shopping

With the holidays approaching, merchants are hoping consumers will fill their shopping carts both in the stores and online. Internet shoppers need to be very aware of what they spend as many of those purchases will end up on credit cards.

"Holiday shoppers can charge a lot of gifts on the Internet without a spending plan," said Kim Womack of Consumer Credit Counseling Service of South Texas. "A click here and a click there and before they know it, they’ve spent hundreds, if not thousands of dollars," said Womack, director of education.

Online shoppers are expected to spend over $13 billion this holiday season, $1.8 billion on toys and video games alone reports eMarketer's and Forrester Research. The National Retail Federation predicts consumers will spend an average of $649 on gifts, and that over 51 million Americans will buy at least one holiday gift on the Internet.

Before you log onto your favorite online auction or preferred retailer, here are seven tips from CCCS of South Texas to avoid online overspending. CCCS is a nonprofit, community service organization that provides confidential counseling, guidance, debt management and education programs to financially troubled consumers.

1. Develop a holiday spending plan. While gifts are the first thing that come to mind when you think of the holidays, don’t forget meals out, gift-wrapping, greeting cards, postage and travel expenses. By the time these costs are added up, the typical household will spend $940, according to a 2001 survey by the National Retail Federation. Before you go shopping, decide what you need to buy for the holidays and how much you can afford to spend. This is your holiday spending plan and stick to it.

2. Make a gift list. Armed with your spending plan, decide who you will give gifts to this year and how much you’re going to spend on those gifts. In general, limit gift buying to close friends and family and send everyone else a greeting card with a personal note. Keep the list with you so you can take advantage of bargains. Also keep accurate records of what you spend on each person.

3. Pay as you go. Did you know that the American Bankers Association says that the typical payoff time for holiday debt is four months? By the time you add in interest, you could spend $120 for that stereo you purchased online for $100. The best way to avoid huge interest payments and post holiday bills is to pay cash for items as you buy them. If you need time to save up for a major purchase, ask about a no-interest layaway program.

4. Create a credit card ledger. Write your credit card purchases down in a notebook so you know how much you are spending and don't get surprised at the end of the month. If you can balance a checkbook, you can keep a credit card ledger.

5. Use credit cards responsibly. When using a credit card to make an online purchase, be sure to pay off the bill in the interest-free period. You may be able to buy yourself an extra few weeks by purchasing at the beginning of the billing cycle. Always use the card with the lowest interest rate just in case you have to carry a balance. Don’t open accounts just to get discounts on holiday purchases from retailers.

6. Stop when you're done. When you’ve completed your holiday shopping, turn off the Internet and back away. Cybershoppers will be bombarded with spam and could be tempted by sales or offers of free shipping. Buying something you don’t need at a good price is no bargain. Instead, wait for post-holiday clearance sales.

7. Get budgeting help if necessary. CCCS recommends that consumers spend no more than 1.5 percent of annual income on holiday gifts. This means that a family earning $30,000 a year should spend about $450 on gifts. For help with setting and keeping a holiday budget, CCCS has holiday educational materials and consumer tools available. Counseling can also help shoppers establish a plan for purchases and paying off holiday debts.

"With a good plan, you won't be one of the online shoppers who overspends this season," said Womack. "Besides, the best online deals often happen after Christmas. Those who aren’t broke in December can take advantage of these deals and get a jump on next year."

CCCS of South Texas is a nonprofit, United Way agency and a member of the National Foundation for Credit Counseling (NFCC). CCCS has been providing free counseling and educational services in the South Texas area since 1969. The agency also offers a Debt Solver Plan to those with severe financial difficulties. This repayment plan is an alternative to bankruptcy. CCCS has numerous offices in the Crossroads, Coastal Bend and Rio Grande Valley areas. For more information, call 576-9899 or visit www.cccsstx.org.