Black Friday Shopping: Avoid These Credit-Card Pitfalls

Summary

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WSJ Your Money Briefing

Episode: Black Friday Shopping: Avoid These Credit-Card Pitfalls

Date: November 27, 2020
Host: J.R. Whalen
Guest: Amber Burton (Personal Finance Reporter, WSJ)

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Episode Overview

This episode focuses on the unique challenges facing holiday shoppers in 2020, particularly during Black Friday amidst the pandemic. With more consumers shopping online and many facing increased financial stress, Wall Street Journal personal finance reporter Amber Burton joins the show to discuss how shoppers can avoid common credit card pitfalls, resist unnecessary spending, and protect themselves from fraud.

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Key Discussion Points & Insights

1. Pandemic’s Impact on Holiday Shopping

• Increased Spending to Make Up for a Difficult Year:
  • Despite financial hardships and a tumultuous year, people are using the holidays to make up for missed celebrations by increasing spending on gifts, decorations, and food.
  • Amber Burton: “People are really using the holiday season this year to sort of make up for how the rest of the year has gone.” (01:58)

2. Smart Credit Card Use & Pre-Shopping Planning

• Evaluate Your Financial Situation First:
  • Before shopping, assess existing credit card balances and utilization rates.
  • Make a list and set a budget before making purchases.
  • Amber Burton: “Take a step back and look at what bills do you already have... so that you know what you’re walking into.” (02:55)

3. Avoiding Impulse Purchases

• Watch For In-Store Impulse Buys:
  • Especially pay attention to small, tempting items near the register, which can quickly derail a budget.
  • Amber Burton: “Those unexpected expenses on your credit card... could hang on even months after the holidays.” (03:28)

4. Are Black Friday ‘Deals’ Actually Deals?

• Not Everything Is a Bargain:
  • Research (WalletHub) shows over a fifth of Black Friday items aren’t discounted more than on other days.
  • Amber Burton: “21% of items offered on Black Friday are not actually of greater savings than any other day of the year.” (03:51)

5. The Pitfalls of Store Credit Cards

• Think Before Signing Up:

  • Store cards often come with high interest rates; not ideal if you tend to carry a balance.
  • Signing up for a store card involves a hard credit inquiry, which can temporarily lower your credit score.
  • Amber Burton: “If you’re the type of person who typically carries balances... this might not be the right card.” (04:18)
  • “That hard pull could push you down about five points.” (05:10)

• Strategize Card Use:

  • Plan purchases around credit card payment cycles and your pay schedule to ensure you can pay off balances in full.
  • Spread purchases over multiple cards to avoid maxing any out.
  • Amber Burton: “You could spread some of those costs across different cards and really match it up with when you’re getting paid.” (04:43)

6. Fraud Prevention and Security

• Be Vigilant:
  • Monitor your credit report regularly and act quickly if you spot anything suspicious.
  • Avoid clicking on suspicious links and be careful with unfamiliar websites or offers.
  • Amber Burton: “Pick up the phone, ask about anything that you don't recognize. That’s number one.” (05:40)
  • Use long, unique passwords to protect accounts.
  • Notable Mention: Liz Lasher, VP at FICO, echoes the importance of obsessive monitoring and prompt action.

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Memorable Quotes

• On the emotional drive for holiday spending:
  • “People are really trying to make up for those missed birthday parties and graduations by putting a little bit of extra in terms of decorations, gifts, and food...” — Amber Burton (01:58)
• On store credit cards:
  • “If you’re the type of person who typically carries balances on your credit card, this might not be the right card just due to the high interest rates.” — Amber Burton (04:18)
• On Black Friday deals:
  • “21% of items offered on Black Friday are not actually of greater savings than any other day of the year.” — Amber Burton (03:51)
• On fraud vigilance:
  • “The earlier you pick up your phone and make that call, the better.” — Amber Burton (06:26)

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Notable Timestamps

• 01:58: Why people are spending more on holidays in 2020
• 02:55: Steps to take before shopping and using credit cards
• 03:28: Dangers of impulse purchases in stores
• 03:51: Black Friday deals aren’t always the best deals
• 04:18: The hidden costs of store credit cards
• 04:43: How to strategically use multiple credit cards
• 05:40: Fraud prevention tips and the importance of vigilance

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Tone & Language

The episode maintains a conversational, practical, and reassuring tone. Both J.R. Whalen and Amber Burton provide personal finance advice in simple, direct language, making complex financial precautions easy to follow and approachable for everyday listeners.

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Summary Takeaway

While many shoppers might feel compelled to spend more this holiday season as a way to compensate for a tough 2020, Amber Burton urges caution: evaluate your financial position before shopping, avoid the trap of impulse buys and misleading Black Friday deals, be wary of signing up for high-interest store credit cards, and stay vigilant against fraud by monitoring your accounts and protecting your information. These habits, says Amber and her expert sources, will help you end the holiday season on stronger financial footing.

Transcript

[Amber Burton]

Still running global payroll like a relay race. Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already use. Workday SAP, Netsuite operate like a local everywhere. Visit d e l.com WSJ that's d e e l.com WSJ.

[J.R. Whalen]

Here's your money briefing for Friday, November 27th. I'm J.R. whalen for the Wall Street Journal. Spending most of our days at home during the pandemic has sent online shopping sharply higher. And that's likely to shift into high gear during the holiday season starting today, Black Friday. But while you shop till you drop, keep in mind warnings from financial experts about loading up your credit card or

[Amber Burton]

opening a new one before anyone even enters a store or goes online. What's recommended by a lot of different experts and analysts is that you take a step back and look at what bills do you already have on your credit cards? What's your utilization look like so that you know what you're walking into.

[J.R. Whalen]

Our personal finance reporter Amber Burton will discuss pitfalls to watch out for when using your credit card this holiday season. That's after the break. Black Friday marks the unofficial start of the holiday shopping season. But in a year when the pandemic has put many Americans into debt, financial experts are warning consumers to be smart about how much they spend and make sure that Black Friday offer you've got your eye on really is a good deal. For more, let's bring in our personal finance reporter Amber Burton. Amber, thanks for being here.

[Amber Burton]

Yeah, thank you for having me.

[J.R. Whalen]

All right, Amber, 2020 has been rough on a lot of us. How is that making this holiday shopping season, you know, different from years past?

[Amber Burton]

Yeah, it's definitely different from years past. I mean, it's a little bit counterintuitive. You would think with this year being so different that people might be scaling a little bit back when it comes to the holidays. But actually, people are really using the holiday season this year to sort of make up for how the rest of the year has gone. I spoke to one industry analyst who said this is really how people are making up for a crummy 20. And he's observed it with a lot of past holidays. Halloween and Thanksgiving were his examples of how people are really trying to make up for those missed birthday parties and graduations by putting a little bit of extra in terms of decorations, gifts and food just to kind of support the fact that the year has been a little bit crazy.

[J.R. Whalen]

Yeah, that's for sure. You know, credit cards can make things really easy. You know, they say it's better to give than to receive, but shoppers can rack up balances and interest pretty easily. So what kind of planning should they do before clicking the checkout button, before

[Amber Burton]

anyone even enters a store or goes online? What's recommended by a lot of different experts and analysts is that you take a step back and look at what bills do you already have on your credit cards? What's your utilization look like so that you know what you're walking into? And on top of that, go ahead and do that easy planning like making a list and budgeting before you decide what you want to purchase.

[J.R. Whalen]

Now, a lot of people will probably choose to shop from home, but with health and safety in mind. But what are you hearing from money experts that shoppers should watch out for with their wallet in mind if they do go into stores?

[Amber Burton]

A lot of experts are really saying watch out for those impulse buys, those different little gifts that you see that are near the cash register. That's where a lot of things are going to kind of throw your budget into whack those unexpected expenses on your credit card that could hang on even months after the holidays.

[J.R. Whalen]

Now, the other thing is, while merchants do heavy promotion for Black Friday, shoppers probably should make sure they're actually getting a good deal on what they want to buy.

[Amber Burton]

Yeah, not necessarily. Stores do not always roll out their best deals on Black Friday. Wallet Hub research determined that 21% of items offered on Black Friday are not actually of greater savings than any other day of the year.

[J.R. Whalen]

And no doubt when we're shopping either online or in the store, we're going to see ads encouraging us to sign up for a store credit card to get an extra discount. And, you know, an extra 10 or 15% is nice, but is there more for people to think about there?

[Amber Burton]

So when it comes to in store credit cards, you're really going to want to take a step back and think about, is this card really for you? If you're the type of person who typically carries balances on your credit card, this might not be the right card just due to the high interest rates. So really taking that extra moment, not making that quick decision could go a long way.

[J.R. Whalen]

Now, what if somebody has a few credit cards in their wallet? How should that play into strategizing their holiday shopping?

[Amber Burton]

You really can strategize your holiday shopping ahead of time if you think about your cards and think about what the different payment Dates are you could spread some of those costs across the different cards and really match it up with your when you're getting paid your own pay schedule. That way you know that I can pay this in full on this one card and then my next payment cycle I can pay another card in full. If you do decide that you are going to get that in store credit card, you do keep in mind that they are going to do a hard pull of your credit. Anytime you get a new credit card, there is a hard pull of your credit and that's going to knock your credit score down for just a little bit. That's always temporary, but it's something to keep in mind, especially if you're on the cusp of, you know, a good or a great credit score, that hard pull could go push you down about five points.

[J.R. Whalen]

And you know, scammers tend to be out in force this time of year. What are financial experts telling you about the need to be on the lookout for fraud?

[Amber Burton]

For example, Liz Lasher, the VP of portfolio marketing for fraud at fico, she's reminding people to just obsessively check your credit reports, meaning just keep an eye on your reports if anything looks suspicious. I think one thing that people often make a mistake on is not picking up the phone. Pick up the phone, ask about anything that you don't recognize. That's number one. But also, you know, think twice before you click on any advertisement or website when you're online purchasing this year. That's going to protect your personal identity. If you're not just clicking on every cell that you see. Just take that extra moment and make sure that you're sure about the security of the site that you're clicking on and the offer that you're purchasing. A lot of previous stories I've done on credit scores, some of the financial advisors I spoke with for past stories always remind their clients that, you know, if you see something that does not belong on your credit report or on a bank statement, anything that looks just a little bit fishy, the earlier you pick up your phone and make that call, the better. And also be sure your passwords are protected as well. The longer the password, the better.

[J.R. Whalen]

All right, that's Wall Street Journal personal finance reporter Amber Burton. Amber, thanks for being on the show.

[Amber Burton]

Thanks for having me.

[J.R. Whalen]

And that's your Money briefing. I'm J.R. whalen for the Wall Street Journal.

[Amber Burton]

Still running global payroll like a relay race deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already workday SAP netsuite operate like a local everywhere visit deel.com WSJ that's d e e l.com WSJ.