The 5 worst holiday gotchas

Avoid bank and retailer fees and other big money wasters this year

Holiday time is tough enough on your budget. You don't want to spend more than you planned because a retailer or credit-card company came up with some tricky way to squeeze more money out of you. Well, you can beat the system! You just need to know where to look for these sneaky shopping traps.

Trap #1

Hidden debit-card fees

Whipping out your debit card to pay for holiday goodies probably seems like a budget-friendly idea because the cash is immediately withdrawn from your account. No need to worry about paying interest on a credit card or fees for bounced checks. But using a debit card could end up costing you a lot more than you'd think. In the past banks would reject a debit purchase that was more than the amount you had in your account. But many banks now process the purchase-and then hit you with an overdraft fee. Those charges range from $25 to $35 at 16 of the largest banks, according to a July Consumer Federation of America survey. If you buy several gifts in one day and use your debit card to pay for gas, groceries, and lattes, you could be hit with multiple fees. In September, Bank of America, JPMorgan Chase, and Wells Fargo announced plans to lower or eliminate overdraft fees. Let's hope other banks will follow suit.

Dodge it! Use a credit card for large purchases, especially if you pay the full balance each month. Credit cards give you a lot more protection than other forms of payment if your account number falls into the wrong hands or if you have a legitimate beef with a seller and want to dispute a charge. Use a debit card only for small purchases if you're relatively certain you won't need the extra protection a credit card provides and you're sure you won't go over your balance.

This article appeared in Consumer Reports Shopsmart Magazine.