With the economy in such bad shape many people are limiting themselves to strict budgets as they go holiday shopping.

For many, that brings up the very important question: cash or credit?

"Learning Express" toy store shopper Connie Mitchell said she prefers cash since there are no bills after the holidays.

"Oh it's a lot less stressful, it really is," Mitchell said.

James Calvert said he's moved away from using credit as much as he used to.

"I've been much more interested in using cash because I know the money is spent and I'm not trying to use it for something else," Calvert said.

Kathy Berg is making a case for credit.

"We know what we're spending and at the end of the month we just pay it at one time," Berg said.

And Elizabeth Chisom, the manager at the high end boutique "Uniquities" is still seeing a steady stream of credit customers.

"I feel like if people are going to shop they're going to shop regardless of the economy," Chisom said.

So cash or credit, and does it matter? Clearpoint Financial Services Credit Counselor Erica Batts said it does this year because credit companies are cracking down.

"You have people whose credit line may have been frozen for whatever reason," Batts said.

Interest payments can add up quickly and in some cases interest fees have gone up. Batts said cash is your best bet if you want to stay on track. 

"That way you know how much you're spending. A lot of times with credit we're so used to swiping you don't have a conscious mind to how much you're spending."

Still, "Learning Express" owner Jennifer Crowder said she's seen an increase in a third form of payment.

"I think we've definitely had an increase in the amount of people using debit cards over credit cards," Crowder said.

Batts said debit cards are OK depending on how you handle them.

"Debit cards are great as long as you track your expenses," Batts said.

Related Links

1. For Budget Help From Clearpoint Financial Solutions
2. Budget Calculator
3. Holiday Spending Worksheet