Smart holiday spending: Choosing the best payment method for your purchases

'Tis the season of giving, (and spending). Whether it's gifts, holiday travel, or treating yourself to something special, chances are your wallet will see a lot of action as we close out the year. The good news? A thoughtful plan for how you pay can help you get the most out of every purchase.

From earning rewards to staying on budget, each payment method offers unique benefits. Whether it's credit cards, debit cards, Buy Now Pay Later (BNPL), or cash, the best choice depends on your priorities.

Before you swipe, tap, or pay in cash, let's discuss your options so you can find the payment style that balances your gift-giving aspirations with your financial goals.

Cash: The classic option

Depending on your priorities and budget, cash is a great way to approach the flurry of holiday spending. Sure, it might feel a little old school in today's tap-to-pay world, but there are major benefits to using this tried-and-true payment method.

• Pros: It's virtually impossible to overspend and put your budget at risk with cash. Once it's gone, it's gone. Some retailers also offer discounts for cash purchases.
• Cons: Cash makes online shopping tricky, if not impossible. If it's lost or stolen it's difficult to recover.

Debit Cards: Your digital cash

Think of debit cards like the best of both worlds, with all the modern convenience of tap-to-pay but with the grounded pay style of cash.

• Pros:
  • Debit cards make online shopping a cinch.
  • Zero Liability Protection – if an unauthorized purchase is made you are protected from the charge.¹
  • Convenience of swiping, tapping, or paying through your mobile wallet.
  • Your debit card makes tracking your spending effortless. All activity is there for you to see through digital banking tools, so you know where and how much you're spending.
  • Security: knowing if your card is lost or stolen it's easy to place a hold on it until it's recovered.
  • More bang for your buck: Activate the CashBack+ program with your Golden 1 account linked to your debit card to earn cash back from your favorite merchants and brands, whether you're shopping online or in-stores.²
  • Budgeting is simple with a debit card, ensuring you don't spend more than what's available in your account.
• Cons:
  • Using your debit card without caution can lead to spending more of the contents of your account than you planned, which can throw your budget off track.
  • Be aware of potential overdraft or insufficient fund fees, if overdraft protections haven't been set up with your account.

Buy Now, Pay Later: Flexible, but use caution

Buy Now, Pay Later (BNPL) services like Affirm, Klarna, and Afterpay have become popular for holiday shopping, especially online. They allow you to split purchases into smaller, manageable payments, oftentimes interest free. Kind of like the lay-away option from bygone retail eras.

• Pros:
  • Secure and convenient for both online and in-person transactions.
  • Added peace of mind: most services include fraud protection.
  • Possibility for flexibility payment flexibility, including early pay-off.
  • Some platforms offer rewards and cashback programs.
  • Even though these are usually interest-free payment options, they don't require a high credit score for approval.
• Cons:
  • Possibly the slipperiest slope in terms of potential to spend more than what's best for your budget. Thinking of a purchase in smaller, easily digestible payments can encourage further spending, so proceed with caution.
  • Any late payments on these platforms typically incur fees, which means you could end up paying more for something than its actual cost.
  • Good payment habits are not rewarded. These payments aren't reported to the credit bureau, which means there won't be a positive impact on your credit score, no matter how outstanding your repayment habits were.

Credit Cards: turn spending into rewards

Among the most powerful options in your holiday shopping toolkit, credit cards offer the most in terms of benefits that make your holiday purchases work smarter, not harder.

• Pros:
  • First and foremost: rewards. Credit cards are tough to beat when it comes to rewards. Whether it's in cashback or points, you can get more for your spending this season. Explore all of the Golden 1 rewards cards options and enjoy up to 4% cashback³ every time you get into the spending spirit.
  • A no-brainer for online shopping ease.
  • Gives a grace period between the day of purchase and when you actually have to see the money leave your account.
  • Zero liability protection means you're protected from any unauthorized charges²
  • Convenience is a major factor to your credit card, allowing you to tap, swipe, or use your mobile wallet to complete transactions anywhere, anytime.
  • Security is another major factor. If the worst should happen, like you misplace your wallet or your personal information is compromised, you can put a hold on your credit card until things are made right.
  • Responsible credit use doesn't go unnoticed. When you consistently use your credit card and pay it off on time each month, those good habits are reported to the credit bureaus. Over time, that can boost your credit score, which may lead to better interest rates on future loans and credit cards. In other words, smart credit use today can open the door to bigger financial wins tomorrow.
• Cons:
  • The goal with credit cards is to maximize the value of your purchases, not spend beyond your means. Keep a close eye on every purchase and keep your budget on track.
  • Don't forget to consider the possibility of having to paying interest in the event you didn't pay the entirety of your credit card balance by the end of the month.
  • Some merchants simply won't accept credit cards due to the fees merchants pay for credit transactions.

The hustle and bustle of the season can have even the merriest among us feeling a little stressed. Your spending shouldn't add to that feeling. Whether you're a debit devotee, a cash-is-king traditionalist, or a credit card rewards enthusiast, there's a payment style for everyone. Choose wisely and you'll thank yourself in the new year when your finances are still feeling festive.

_{¹Golden 1 provides zero fraud liability for unauthorized transactions on your card when promptly reported. Certain conditions and limitations may apply. See your Credit Card Account Agreement at golden1.com for additional information on unauthorized use.}

_{²To participate in G1 Rewards with CashBack+ you must be 18 years of age or older; have an open and active Golden 1 membership, be the primary account holder of an eligible Savings or Checking account and enrolled in Online Banking; Must be a U.S. citizen residing in the United States and accept Golden 1's terms and conditions for the G1 Rewards program.}

_{³You earn cash rewards on net qualified purchases (less credits, returns and adjustments) for each $1 spent. No maximum limit on total cash rewards earned. Balance transfers, cash advances and cash-equivalent transactions, such as purchases of money orders or gift cards, and certain other purchases/transactions do not earn rewards. We reserve the right to determine in our sole discretion whether a particular transaction is a qualified purchase. A 4% cash reward is offered on net qualified gas purchases and electric vehicle (EV) charging stations at eligible merchants. Cash rewards on gas and EV charging station purchases combined are limited to up to $5,000 in purchases annually, then 1% thereafter. A 3% cash reward is offered on net qualified purchases from eligible restaurants, including fast food and food delivery. A 3% cash reward is offered on net qualified purchases from eligible grocery stores or supermarkets. Purchases made at wholesale warehouse clubs are not eligible for rewards. All other net qualified eligible purchases will receive a 1% cash reward for each $1 spent.}