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Paying for holiday spending

By Marcie Geffner · Bankrate.com
Monday, November 29, 2010
Posted: 9 am ET

Consumers readying themselves for holiday expenses have spoken, and they've declared a strong preference for cash and debit cards, rather than credit cards or layaway programs this year.

That's according to a new online poll of 4,800 people by the National Foundation for Credit Counseling, or NFCC, in Silver Spring, Md. The poll found that 70 percent of respondents said they intend to pay for their holiday spending with either cash or a debit card; 10 percent plan to charge their purchases and pay off the debt in full when they receive their statement; 9 percent expect to charge purchases and pay off the cost over time, and 11 percent intend to utilize layaway programs.

• Paying with cash or a debit card is "a smart choice for many," the NFCC said in a statement, though the organization also pointed out that credit cards offer some advantages over debit cards or cash. For instance, credit cards typically offer an easier way to contest charges for mail-order purchases that don't show up.

• Charging purchases and paying off the card in full is "one of the best financial moves a consumer can make," the NFCC said. This option allows consumers to "buy now and pay later, build a positive credit history … and never pay a cent of interest."

• On the other hand, charging purchases and paying off the amounts over time is "a slippery financial slope," the NFCC said. So slippery, indeed, that some people find themselves still paying off last year's debts when they add this year's charges to the tab.

• Layaway programs are "back and gaining in popularity," the NFCC says. Layaway allows consumers to make a deposit toward a purchase and then make installment payments until the item is paid for, at which time they can take possession of it.

So, what's your choice for holiday shopping? Cash, debit card, credit card or layaway?

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