So Christmas is over and your loved ones — bless ’em — have bestowed upon you a few gift cards, and even some cash, with which to splurge.
Because we’re here to serve, we asked a few financial experts about ways that you might put your Christmas swag to maximum use.
Here, to aid you in your post-Christmas/pre-Super Bowl spending spree, are a few options.
Option 1: Spend it now, of course
"Blow it on yourself," offers Bill Martin, chief executive officer of Service1st Bank of Nevada. "The giver … wouldn’t have it any other way. Take it in the spirit in which it was given."
And if your holiday haul includes gift cards, federal regulations that took effect in 2010 may help you to stretch the value of your cards further than you could last year at this time.
Under the Credit Card Accountability, Responsibility and Disclosure Act, the monetary value of a gift card sold on or after Aug. 22 of last year will remain the same for at least five years from the date the card was purchased. In addition, the act prohibits the issuers of gift cards from imposing inactivity fees unless a card hasn’t been used for at least one year.
Bottom line: With the threat of fees or reductions in card value gone, you can hang onto your holiday gift cards longer. And that means you can wait to use them during sales throughout the year, enabling you to leverage them for even more value.
But it’s worth it to examine the terms of any gift cards you receive, notes Michele Johnson, president and CEO of the Consumer Credit Counseling Service. For instance, the credit card act doesn’t apply to reloadable prepaid cards or cards given out in connection with promotions.
Also remember, Johnson adds, that losing a gift card "is like losing cash."
And there is a risk to keeping the card. Deborah Danielson, a certified financial planner and president of Danielson Financial Group, has had gift cards for restaurants that, by the time she was ready to use them, had closed.
"That’s not going to be the case with Walmart," adds Danielson. "But if (the card is for) a smaller, boutique place, they might have just been hanging on until the first of the year."
Option 2: Save it
Interest rates on savings accounts are so anemic these days that spending, rather than saving, holiday cash is pretty tempting. But painfully low interest returns don’t negate the reality that it’s always prudent to put at least a little something aside for a rainy day.
By saving holiday gift money, "regardless of the amount you make on it right now, you’re saving for the future," Johnson explains. "You’re saving for those emergencies."
In short, Johnson says, "you control your financial future instead of letting fate control it."
For children or teenagers, consider placing at least some of that holiday cash in a college tuition savings account.
"If you took that (gift of) $100 or $150 and set the money aside for 10 or 15 years, there is some real value to that," Danielson says. "You don’t think about it because it doesn’t seem like a big deal, but 10 years from now, if they’re earning anywhere near a decent investment return, it’s at least doubled."
In fact, Danielson adds, this a good move for other holidays — birthdays and the like — too. And, in a similar vein, young workers may wish to use their holiday cash gifts or year-end bonuses to start, or add to, a Roth individual retirement account.
Option 3: Pay down existing debt
Having a few unexpected bucks in hand also creates a great opportunity to add a few dollars to your next credit card, car or mortgage loan payment.
An extra $50 or $100 may not seem like much. But, Johnson suggests, "go to those online calculators and put in a figure."
Say, for instance, that the first payment on your 60-month, $15,000 car loan is due on Jan. 16. At 6 percent interest, you’ll be paying $289.99 a month and you won’t actually own your car until Jan. 16, 2016.
However, put $100 of your Christmas cash toward your loan payments every January, and (barring prepayment penalties) you’ll own your car one month earlier. Add to that another $100 payment each year — from, maybe, your birthday cash gifts — and you’ll end up owning the car three months earlier.
"It does not have to be a large sum to make a huge difference long term," Johnson says.
Option 4: Use it as a teaching tool
Christmas cash can be a great tool for teaching kids about money management.
"I think, especially for Christmas, this is a wonderful opportunity for parents to teach that you save a portion, you donate a portion and you can spend a portion," Johnson says. "Teach them, going forward, that savings is very important, and contributing back to the community in which they live is very important, as well as satisfying yourself by buying a thing."
However, with savings account interest rates stuck on the wrong side of the decimal point, wowing kids with — to use a phrase once heard in economically headier days — the miracle of compound interest is going to be a tough sell. In addition, few banks today want to deal with the small-sum, entry-level savings accounts parents used to open to teach their kids about saving.
Some parents may choose to create a "family bank," telling a child that the parent will add, say, a dollar to a child’s piggy bank for every $10 the child puts into it himself.
Martin cautions, though, that saving and saving to earn interest are two different things.
Traditionally, Martin says, "people saved. They didn’t buy things they couldn’t afford. They saved up for it, and interest rates, I’m sure, were meager then as well."
A parent "could still say to a child: ‘You’ve got $100. Let’s save $50, or at least $75, to open a checking account or put in a piggy bank … because you may want to save up for a bicycle," Martin says.
Option 5: Give it away
It has been a tough year for just about everybody, including nonprofit organizations and charities that have seen contributions drop at the same time demand for their services has increased.
Why not extend the spirit of the just-ended holiday season by donating your Christmas cash and gift cards to worthy charities?
Danielson says her nieces this past Christmas decided to take a portion of their holiday gift-giving budgets and spend it on gifts for kids who otherwise wouldn’t receive any.
"They’re excited because they’re buying gifts for that child," she says. "So it’s a way of teaching sharing and caring."
Contact reporter John Przybys at firstname.lastname@example.org or 702-383-0280.