It may be the season of giving but to do that most are about to spend a lot. 13 News checked with a Rockford bank on what are some options for paying for Christmas.
Malls are bustling, cash registers are ringing and people are spending. It's the holiday shopping season and for most that means shelling out big bucks. You might be tempted to choose plastic to pay for it but one area banker says do not start there.
"In a perfect world you obviously want to use cash or money that you have in your checking or saving," says Justin Burke, Alpine Bank, cash management officer.
Alpine Bank, like a lot of area banks offers a skip a loan program. That lets you skip say a car payment or non-mortgage loan. But that might just give you a few hundred dollars, but what if you needed a thousand dollars. If you got a small short term loan which offers you the chance to pay it back in three years that would cost an extra $220 over the term of the loan. You would save money by paying it off sooner which they recommend.
If you picked a credit card with an interest rate around 14-percent, that's the average, it would cost you $44 if you paid that thousand dollars off in six months. It would cost you $80 if it took you a year.
However, if you have a high interest card, one charging a 25-percent APR, it would cost you $74 for six months of payments and $140 for a year.
"If you have to use a credit card I would recommend using a low interest rate credit card possibly stay away from the retail store credit cards. If you have a Visa that has a lower interest rate and you can pay it off in a shorter period of time use that card but just make sure you are disciplined," says Burke.
Another option for shoppers is layaway. Burk Burkee look for free layaway programs at stores. It can be a great option for people who either don't have credit or want to avoid a bunch of debt after the holiday.
"Let's face it Christmas comes every year so you need to make sure it's paid off by the time next year comes around," says Burke.
He also warns stay away from pay-day loans or cash advances from a credit card that can come with high interest rates. Also, if you have problems paying for Christmas this year you might want to consider a Christmas savings club for next year. A lot of banks offer a saving account that lets you automatically put money away and doesn't let you touch it until a certain date.