Using credit for holiday shopping? Pros and cons

During the sales-crazed holiday season, even the thriftiest of shoppers may rely a little too heavily on credit cards. Plastic offers rewards and protections you don't get with cash or debit cards, but it does have risks. Consider these pros and cons before using credit cards for holiday shopping.

THE PROS

1. Rewards programs

With a rewards credit card, every swipe earns you miles, points or cash back. There are also bonus categories you can take advantage of when holiday shopping. If you're already a prolific rewards user, you may be able to use rewards points to pay for some of your holiday gifts.

2. Safer option

Consumers have zero liability on unauthorized purchases with credit cards, meaning you're not on the hook if your account is drained. Debit cards don't have the same protections, so if your card is stolen and used to make purchases, you may incur some liability (meaning you won't get the full amount back), and it may take a few weeks for the money to be returned to your account.

3. E xtra protections

Many credit cards come with extended warranties and purchase protection on items bought with the card. Some even have price protection in case the price on the item drops within a certain time period. Read your card's disclosures to learn what it covers. Note that credit cards also give you the federal right to withhold payment and dispute a transaction if a purchase made with the card is damaged or defective. Not so with debit cards or cash.

4. Additional discounts

Beverly Harzog, credit card expert and author of Confessions of a Credit Junkie, suggests consumers find out if their credit cards have online shopping malls. "Many of the major issuers have shopping portals where you can get deep discounts on items at popular retailers," she says.

THE CONS

1. Easy to overspend

When your stack of cash is gone, it's gone. Credit cards on the other hand, may feel limitless, and those without strong self-control may find it too easy to spend more than they wanted to — especially during the festive holiday season.

2. Interest payments and debt

If you can't pay your balance in full each month, you'll pay interest. "Rewards credit cards tend to have higher interest rates, so if you carry a balance, you could end up wiping out the rewards you earned," Harzog says. You could also find yourself mired in debt for months after the holidays.

3. Credit damage

General credit card usage won't hurt you, but overindulgence for the holidays can hurt your credit score . Avoid maxing out your credit card or racking up huge amounts of debt during the holidays, which will ding your credit.

4. Data breaches

Data breaches are an increasingly common risk. If your card numbers are stolen, you are protected, but it's a headache to resolve. If you use a credit or debit card during the holidays, regularly monitor your account for fraudulent activity.

Smart credit card tips

If you want the perks of plastic but tend to overspend, Lynnette Khalfani-Cox, author of Zero Debt, recommends these holiday shopping strategies:

• Create a budget. Determine your total spending limit. If you're using a credit card, aim for a figure you can reasonably pay off by the end of the month. If not, limit yourself to a window of 90 days or less, and stick to that payoff plan so you owe minimal interest. Then divide that limit by your number of gift recipients to see your budget per gift.

• Bring a buddy. Bring a friend or relative and tell them your budget to keep you accountable.

• Don't be impulsive. On the verge of an impulse purchase? Put it down and give yourself permission to go back for it the next day.

Bottom line: Don't fear plastic if you can be responsible. If you can retain self control and stick to purchases within your budget, your credit card has plenty of benefits for holiday shoppers.

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MORE: How to protect your credit score this holiday season

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