Frugal or cheap? The Collins dictionary offers a brief definition of each:

  • Frugal: “Economical in the use of money or resources”
  • Cheap: “If you describe someone as cheap, you are criticizing them for being unwilling to spend money”

We all know a quality pair of shoes is likely to serve you for years, while cheap shoes may find their way to a trash bin in just a few months. The same holds true for most consumer goods, even when we’re dealing with big-name brands. It’s not a secret that the quality of clothing items sold at a brand’s outlet is often subpar compared to the brand’s flagship stores. Of course, there are exceptions to everything, but these exceptions only reinforce the rule.

The conclusion seems clear. A frugal person will try to buy quality stuff, but probably wait for a genuine sale and find a coupon or use cash back (or both) to offset some of the costs. A cheap consumer just buys whatever they can find at the lowest price possible.

In other words, frugal is good, while cheap (in relation to a person) is bad. You wouldn’t criticize a frugal consumer for not spending freely. A frugal person knows their way around money. A cheap person, on the other hand, is seen as stingy, dumb (penny-wise, dollar-stupid), often inconsiderate of the needs of others and, in general, no fun to be around.

Well, if it were only that easy!

Cheap isn’t always bad

When you’re broke, it’s not like you have a lot of choices. A low-quality shirt is better than no shirt, and a beat-up clunker is better than no car at all, especially when your job and livelihood depend on being able to drive.

This seems obvious. We don’t normally think of people who find themselves in a tight financial situation as “cheap” because of their shopping choices.

But there is more to the whole “frugal versus cheap” debate.

Don’t you ever get bored with your clothes, electronics or any other consumer goods? Do you really need them to serve you for years to come? If you’re like most people, your answers are “yes” and “no.”

“It is common for people to replace products even though they are functioning well,” found researchers from Delft University of Technology in the Netherlands. “Research shows that 31 percent of washing machines, 66 percent of vacuum cleaners, 56 percent of TVs and 69 percent of smartphones are replaced for other reasons than being broken ‘beyond’ repair. Also in the fashion industry, many clothes are worn for a shorter amount of time than they actually could.”

Even frugal people want new things from time to time. So if you replace consumer goods because, like most people, you want something new and trendy, maybe opting for the highest quality items isn’t the best idea — with or without coupons.

This is where the notions of “cheap” and “frugal” begin to blend a little, don’t they?

Holiday shopping during 40-year-high inflation

No matter where we stand on the frugal versus cheap debate, cheap gift-givers are the worst. If you’ve ever been on the receiving end of a cheap, inconsiderate, ridiculous gift, you know that the gift itself is not the worst part. The worst is faking a smile and giving the donor a warm thank you.

However, the record 2022 inflation might test even the most considerate gift givers. Holiday shopping will look different this year with inflation at 40-year highs, a Bankrate survey shows. “Consumers are still spending, but they’re being especially thoughtful about where each dollar goes,” says senior industry analyst Ted Rossman.

So how do you find the balance between buying awesome gifts and saving money in this environment?

Good news: Big discounts may be coming

There is some good news, especially for consumers who shop online. Adobe analysts predict that “discounts will hit record highs (upwards of 32 percent) this holiday season, as retailers contend with oversupply and a softening consumer spending environment.”

Discounts for computers will be the most impressive, up to 32 percent, according to Adobe, and you can expect discounts on electronics at up to 27 percent, toys at up to 22 percent, apparel at up to 19 percent, appliances at up to 18 percent, and furniture and bedding at up to 11 percent.

Adobe predicted the biggest discounts between Thanksgiving and Cyber Monday, but shoppers may find the best discounts on household appliances in December.

How to be frugal with your credit card

Bankrate’s survey shows most shoppers (54 percent) will use a credit card for holiday shopping — and that brings us to another point.

We at Bankrate always remind readers that the only foolproof way to benefit from your credit card is to pay it off every month to avoid interest. No cash back can overcome credit card purchase APRs that have recently climbed to 19 percent interest. But since life can interfere with the best of intentions, here are a few tips for the holiday season whether you do or don’t carry a balance.

If you carry a balance

There are still ways to catch a breather from high-interest credit card rates even if you have to carry a balance.

Call your credit card and ask for interest reduction. If you’re a consumer in good standing, don’t hesitate to try to negotiate a lower APR.

Look for a new card with a lower APR. Most low-APR cards are issued by credit unions, but some of them allow anyone to join. Also, check our write-up to find a low-APR card from a major bank.

Consolidate your debt with a 0 percent introductory APR card. Some 0 percent intro APR cards have long-term offers of up to 21 months. Use this time to transfer and pay off (or at least pay down) your current high-interest cards.

If you don’t carry a balance

Remember to maximize your rewards or cash back on bonus categories. Here are some examples:

Chase Freedom Flex℠ cardholders: Until Dec. 31, 2022, use your card at Walmart and PayPal for 5 percent cash back. Remember, most online vendors allow you to use PayPal checkout online, as do some physical stores.

Discover it® Cash Back cardholders: Use your card at and grocery stores for 5 percent cash back (up to the quarterly maximum when you activate).

Check special offers from your credit cards. Most cardholders routinely overlook special offers from your cards. So this holiday season, when any help is welcome, try to check if these offers can save you a little with your shopping. There are Amex Offers, Chase Offers, Citi Merchant Offers and BankAmeriDeals among others. All you need to do is log on to your credit card account, choose the deal you like and use your card to make a purchase. Also, if you have several cards from the same issuer, they can differ so check each of them.

Make sure to use the right card for protection benefits. Most consumers pay attention only to cash back or rewards, but there is more to consider. Some cards offer better perks than others. For example, many cards offer an extended warranty, but some Citi cards, like the Citi Premier® Card or Citi® / AAdvantage® Platinum Select® World Elite Mastercard®*, offer not one, but two years of additional warranty. So if you’re about to buy a home appliance, for example, your item can be covered for the next 36 months with a combination of the manufacturer warranty and extended warranty from your credit card.

The bottom line

While frugality (and cheapness for that matter) is often in the eye of the beholder, one thing that clearly separates frugal and cheap people is their attitude toward gift-giving. Frugal people will always consider how their gifts affect others and not become obsessed with spending the least amount of money.

They will, however, try to be smart and strategic about their gifts, buying them at the right time and leveraging all the tools in their arsenal — such as coupons, cash back rewards and special offers — to keep their costs under control.

*The information about the Citi® / AAdvantage® Platinum Select® World Elite Mastercard® has been collected independently by The card details have not been reviewed or approved by the card issuer.