Best ways to shop on Black Friday? Experts break down credit, cash and 'pay later' methods

A spending spree is irresistible on Black Friday but discounts aren't the only thing shoppers should consider.

Nearly half of all customers are on the hunt for promotional discounts and cashback offers and 26% are actively seeking them out more than previous years, according to PayPal's marketing manager Jean Namkung. consumer spending habits study.

A RetailMeNot survey found shoppers plan to spend $932 on average on holiday shopping this year, a 28.5% rise from last year. While in-store and online discounts are essential, shoppers should weigh the advantages and downsides of different payment methods to make the most out of their Black Friday or Cyber Monday experience. 

From credit card rewards to Buy now, pay later benefits, here’s what consumers should consider this week. 

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'Tis the season to build or redeem credit cards rewards

Credit cards remain the most common purchasing method for holiday shopping and like power tools, they can be useful or dangerous. While perks and rewards are appealing for many users, a rise in high interest rates are worth considering, according to Bankrate senior industry analyst Ted Rossman. 

With 20.72% interest rates for average credit cards and over 30% for most store cards, Rossman said the habits of the spender will ultimately determine whether this is a solid payment method. He added that the amount of holders who pay their credit balance in full is roughly split equally. 

"If you plan to carry a balance, that's worrisome just given how high these rates are. But if you can pay in full then I say go for it. I mean, then it's just free money with those rewards," Rossman told USA TODAY.

Rossman said the holidays are a great time to leverage your credit cards by figuring out what rewards each card offers on different types of purchases. It’s possibly a great time to get a new card, and use holiday shopping to build up a credit card signup bonus. 

These are a few common benefits Rossman said often come with credit cards that shoppers can build up or use on Black Friday: 

• Cashback or gift cards
• Airline miles or hotel points 
• Buyer protections (extended warranty, travel insurance, purchase protections)
• ShopRunner membership (free 2-day shipping and free returns at select stores)

“Some credit card issuers offer extended warranties and purchase protections. These can help cover you in the case of damage or theft of certain products,” Russell Nelson, credit card products manager at Navy Federal Credit Union, said in a statement. “Instead of having to pay for these benefits when purchasing a new product, your credit card may already give you these options for free.”

Nelson said Americans may also use credit cards for Black Friday shopping to take advantage of card issuer’s online shopping portal which comes with unique rewards. Navy Federal members can earn up to 15 points or 15% cashback per dollar spent at more than 900 merchants, access free shipping from select retailers and access exclusive special offers.

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Cash payments clear the risk of debt but lack credit benefits

Americans started carrying more cash during the pandemic but data reported by CNN shows cash has become less common for daily purchases since.

However, Rossman said a recent Generation Z trend on TikTok is encouraging people to budget themselves by paying with cash only. He added that some people fill out different envelopes with cash to help categories their grocery and restaurant budget. 

“When the money's out, it's out,” Rossman said. “Personally, I like the idea of using credit like debit as in paying in full to avoid interest, but taking advantage of credit card’s superior rewards programs and buyer protections. But hey, to each their own right. [If] using cash is a good way for you to avoid overspending. Maybe that's worth it.”

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Buy now, pay later can split Black Friday purchases

Store chains like Target and Walmart offer "Buy Now, Pay Later" options for shoppers hoping to spread out their payments. Financial company Affirm offers these plans for merchants and purchasers that could support shoppers on a tighter budget this Black Friday. 

Shoppers can use the Affirm app to choose from personalized biweekly or monthly payment options with a start and end date and no late or hidden fees. Affirm can even pay up to $27,500 over a 60 month term.

"Unlike many credit cards and pay-over-time options, every time you want to use Affirm, you have to apply and get approved," Affirm's Head of Product Vishal Kapoor said in a statement. "This process is quick and easy for the shopper – it happens at checkout in a matter of seconds – and ensures we’re lending to our customers responsibly.” 

Other “Buy Now, Pay Later” apps include Sezzle, Afterpay and Klarna. Apple launched their own option this year called “Apple Pay Later” splitting purchases into split purchases into four payments with zero interest and no fees. 

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PayPal, Venmo work to make rewards and offers accessible

PayPal has returned more than $200 million back in customers pockets through various rewards programs, according to Namkung. The online payment system has worked to alleviate the burden of finding the best price or the best discounts on the consumer, she added. The PayPal Cashback MasterCard provides 3% cashback on every PayPal online payment and 2% on when you don’t spend on PayPal. 

"It's not just about earning rewards, but it's also about being able to redeem rewards really seamlessly," Namkung said. "We don't have any redemption restrictions or minimums for redemption. Users can earn as much or as little as they want to and they can redeem those rewards right away through PayPal checkout or through PayPal Giving."

Paypal's "Honey" browser extension, which automatically discovers coupons and accumulates cashback deals online, is extra helpful for holiday shopping. Namkung added that Venmo's debit card includes cashback offers at top merchants and that Venmo has their own "Buy Now Pay Later" option to accommodate user's budgets.

"You can spread your payment out over weeks or months so that you can afford you know those great gifts that people look forward to you over the holidays," Namkung said.

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