BY ODYSSEAS PAPADIMITRIOU

COMMENTARY

For many New Jersey citizens, the 2012 holiday season will be decidedly bittersweet in the wake of Hurricane Sandy’s destruction. Some will hold family gatherings and exchange gifts in temporary housing or amidst rebuilding efforts. Others will unfortunately have to endure the first holiday season without loved ones lost in the storm. What’s more, regardless of whether you were personally affected by Sandy or not, the holidays are going to be expensive.

The average consumer is expected to spend around $800 on holiday shopping, but that’s a national projection and your costs over the next few months could easily be a lot higher due to expenses related more to the storm than the holidays (e.g. if you’re waiting for insurance money or plan on making charitable donations). The question of the moment is therefore how can one minimize costs this holiday season, especially when it comes to financing?

0% Financing: The Fine Print Matters

You may have noticed that there are a lot of 0% financing offers out there, many of which are offered through credit cards. They aren’t all created equal, as those related to specific retailers are quite risky. More than 60% of the major retailers that have financing offer deferred interest payment plans. Such plans give you a low introductory interest rate – often 0% – but if you don’t pay off your full balance by the end of the introductory period, high regular rates will be applied to your entire original purchase amount. In other words, deferred interest may giveth, but it can just as easily taketh away as well.

Should the latter occur, your holiday shopping costs could suddenly swell by 2,700% or more. For example, let’s say you spend $800 on holiday gifts with a retailer’s co-branded credit card and are only able to pay back $700 before its 6-month 0% intro period gives way to a 17% regular rate. If that card’s promotional financing deal is actually a deferred interest offer, you’d pay $46 in interest even if it only takes you one additional month to bring your balance to zero. That’s compared to the measly $1 in finances charges you’d incur if your credit card offered a straightforward 0% deal and only the balance remaining at the end of the intro term incurred interest.

Forty-five dollars might not seem like all that much, but that’s a 4,500% change, and the actual dollar figures could be much more significant if you run up a larger tab. A number of the major retailers identified as using deferred interest have a large presence in New Jersey, including:

Toys “R” Us

Best Buy

Wal-Mart

Dick’s Sporting Goods

Radio Shack

Home Depot

If all you want for Christmas is a 0% rate, you’re therefore much better off applying for one of the following non-retail credit cards:

Slate Card from Chase: Known as a free balance transfer credit card, Slate’s 15-month 0% introductory period and lack of fees make it capable of saving indebted consumers up to $1,000 while helping them pay down amounts owed much faster than they would otherwise. You can check out a credit card calculator to see how much it would save you.

Citi Diamond Preferred Card: If you don’t have any credit card debt at the moment but are going to need some time to pay off holiday expenses, the Diamond Preferred Citicard is a good choice. It offers 0% on new purchases for 18 months and doesn’t charge an annual fee.

While both of these cards require excellent credit for approval, that’s not as exclusive a designation as you might think. About half of all consumers have excellent credit – FICO Scores of 720 or above.

Other Ways to Minimize Holiday Expenses

Being smart about the way you finance the holidays isn’t the only way to keep costs down. You can also:

Score an initial rewards bonus – Credit card companies are also offering large sums of bonus points, miles, or cash back to new customers who have excellent credit and meet a particular initial spending requirement. The Chase Sapphire Preferred Card, for example, gives you 40,000 points for spending $3,000 within the first three months. Those points can be redeemed for a $400 statement credit, which would certainly help replenish your coffers after the holiday and hurricane seasons.

Sell unused gift cards – Each year, about a quarter of all the gift cards given and received wind up going unused. That doesn’t mean they’re lost forever, though. You can sell leftover gift cards for cash via an online gift card exchange and get up to 95 cents on the dollar in return. In other words, you could give yourself the gift of a subsidized shopping budget, or for those of you affected by the storm, trade in a gift card from a clothing store for one from a home improvement store.

Buy discounted gift cards – If you can sell gift cards online, it figures that you can buy them as well. Online gift card exchanges have thousands of unused gift cards for sale at discounts of up to 80%. Considering that roughly 60% of people want gift cards this holiday season, you’re going to be in the market for them, so why not save?

Do those things, and the holidays are sure to be happy…for both you and your wallet.

Odysseas Papadimitriou is the CEO of Card Hub, a leading credit card comparison website and home to the largest online gift card exchange in the U.S.