7 Money Strategies for Savvy Holiday Shopping

The holidays are a magical time of year, but making merry can take its toll on your wallet. 

More than 4 in 5 Canadians (88%) plan to purchase gifts for friends and loved ones this holiday season, according to a survey of over 1,000 Canadian adults conducted by The Harris Poll on behalf of NerdWallet Canada. Among them, 48% plan to spend $500 or more on those gifts.

As much fun as it is to splurge during the holiday season, this extra spending can create financial headaches in the new year. 

Use these money-saving strategies to help you spread holiday cheer without breaking the bank.

1. Create a holiday budget

Budgets come in handy for all money matters, and holiday shopping is no different. In fact, 48% of holiday shoppers have a strict budget for the amount they will spend on holiday gifts this year, according to the survey.

Although it’s ideal to create a budget well in advance of the holiday shopping season, it’s never too late to plan for how much you’ll spend, and on what.

How to create a holiday shopping budget

Use the following steps to assemble a holiday budget:

1. Look at your debt. Before you allot any money towards holiday spending, assess your debt — especially high-interest debt, like outstanding credit card balances. Having a firm idea of your finances before you start shopping can help you set realistic spending caps.
2. Do the math. Financial experts recommend you spend no more than 1% to 1.5% of your annual salary on holiday expenses. So, if you make $70,000 a year, aim to spend no more than $700 to $1,050 on the holidays.
3. Make a gift-giving list. Presents are a meaty holiday spending category, so make a list of the people you plan to purchase for and consider the type of gift you’d like to give. You’ll likely spend a different amount on a secret Santa exchange with coworkers than you might on a partner or family member.
4. Assemble your budget. Establish spending caps for each of your holiday expense categories. Track what you spend to stay accountable and avoid overspending.

2. Create your own discounts 

Taking advantage of Black Friday sales and other holiday promotions can be exhausting — and may rush you into spending before you’re ready. 

This year, 23% of holiday shoppers will use coupon and cashback sites and apps when making holiday gift purchases, according to the NerdWallet survey. 

These services, which include Rakuten, Honey and RetailMeNot, can provide money-saving discount codes and reward you with cash back when you shop through their online platforms. 

If you do choose to shop in-store, keep in mind that some retailers price match — if a competitor offers a better price, the store you’re shopping at may lower theirs to match. Similarly, some credit cards offer price protection — if the price of something purchased with the card drops within a certain time frame, the issuer will credit you the difference.

3. Maximize credit card rewards

With a cash-back credit card, you earn back a small percentage of what you spend, while a rewards credit card earns points that can be redeemed for entertainment, merchandise and gift cards (all of which can be given as holiday gifts themselves, if you already have some points gathered up).

It’s a strategy many are considering this year, with 21% of holiday shoppers saying they will use credit card rewards to pay for gifts, according to the NerdWallet survey.

If you’ll be purchasing gifts with a credit card, check to see if your credit card offers price protection. With this feature, you can request an adjustment on purchases charged to your card if the item goes on sale at a lower price, within a specified time frame.

Nerdy Tip: If you don’t yet have a cash back, travel or general rewards credit card, the holiday season might be a good time to apply for one, especially if it means getting a generous sign-up offer. Your extra holiday spending may make it easier to meet the minimum requirements for the bonus.

4. Support small and local businesses

Twenty-four percent of Canadians will shop more for holiday gifts at local and/or small businesses this holiday season, according to the NerdWallet survey.

Shopping at local merchants is often beneficial to the community, but it can also benefit the buyer. 

American Express’ Shop Small campaign is one example: Eligible cardholders can earn up to $25 in statement credits when shopping at participating merchants. (Log into your Amex account and check the ‘Offers’ section to see if your card qualifies.) 

The free Scene+ loyalty program is another opportunity to spend locally and save big: You can earn cash-back and discounts at grocery stores, movie theaters and certain restaurants.

5. Watch for credit card fees

Canadian business owners can add a surcharge of up to 2.4% each time a customer swipes a Visa or Mastercard. This surcharge, also known as a credit card processing fee, covers the cost of using credit card networks.

Not all businesses charge processing fees. The ones that do must disclose them to customers. The key to avoiding processing fees is knowing where and how to spot them. Look for fee disclosures at storefronts, cash registers and on websites for online stores. You’ll also see the fee on your receipt as a separate line item. If you’re unsure whether a business charges a fee for credit card transactions, ask.

6. Take advantage of payment options

A growing number of businesses and credit card issuers now offer installment plans or ‘buy now, pay later’ options, both of which let you pay for a large purchase over time rather than as a lump sum. 

Not many Canadians plan to take advantage of these alternative payment options, though. Just 8% of holiday shoppers say they’ll use ‘buy now, pay later‘ services, according to the NerdWallet survey. Are Canadians missing out on a viable payment alternative? Possibly.

‘Buy now pay later’ financing is available through third-party services, like PayBright, AfterPay, Affirm and Sezzle. Oftentimes, there is no minimum spend requirement, so you can get a payment plan for any amount of holiday shopping. However, it’s important to be aware that buy now, pay later plans may incur additional fees, so be sure that you can afford the total cost of the purchase before you commit.

Credit card installment plans are another alternative payment option. But keep in mind that these plans may also come with additional fees, depending on the provider.

7. After the holidays, consider a balance transfer card

If you find yourself struggling to pay off high-interest credit card debt come January, a balance transfer credit card may help.

These credit cards have promotional periods with low interest rates for a designated period of time. Transferring your debt to one of these cards lets you pay down your debt without incurring a lot of interest. But be aware that once the promotional period is over, the interest rate will increase to the card’s regular rate.

Survey Methodology

This survey was conducted online within Canada by The Harris Poll on behalf of NerdWallet Canada from October 3 – 5, 2023 among 1,021 Canadian adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 3.6 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Bria Weaver, [email protected].   

“Holiday shopper” refers to Canadians who plan to purchase gifts during the 2023 holiday season. “Holiday season” refers to the period of time between October and the end of 2023.

About the Author

Shannon Terrell

Shannon Terrell is a lead writer and spokesperson for NerdWallet, where she writes about credit cards and personal finance. Previously, she was a writer, editor and video host for financial…

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