Smart spending

Will that be cash, credit or debit? Recent legislation is making an impact on the best ways to pay for your purchases. Kelli Grant, Senior Consumer Reporter for SmartMoney.com tells you what to think about.

Watch out for minimums. To curb the costs of processing credit card transactions, stores are now allowed to set minimums of $10. You might find yourself buying more than intended to meet the minimum. It's a good reason to carry at least a little cash at all times.

Avoid debit as an ATM. Some stores are starting to curtail how much cash back you can get when you pay with debit. Walgreens, for example, recently reduced it from $40 to $20. Other stores don't allow it at all. If what you really want is cash, you're better off hunting for an ATM.

Look for cash discounts. More merchants are offering them as a way to avoid processing fees. The discount might be a few cents a gallon at gas stations, or as much as 50% at a doctor's office. If you can afford to pay for a purchase in full, in cash, it's worth asking if there's a price break.

Consider protections. Although cash might be cheaper, you do want to go with credit for some important purchases. Credit card purchases are better protected than debit cards. Only credit cards give you the right to file a dispute in the event a hotel overcharges you or a web merchant neglects to send your order.

Weigh rewards. Banks are starting to do away with rewards on their debit cards. If you want something back for your purchases and can afford to pay off the balance in full each month, a credit card may be the way to go. Some of the better ones are offering more than 1.5% back, with bonuses.

For more information on the best way to make a purchase and other consumer tips click here.