This article comes from DR at The Dough Roller, a blog about money management.

With the holiday buying frenzy in full progress, there is no better time than the present for some money saving strategies. One of them is simple, easy, and free–using the right credit card to make holiday purchases. Yes, credit cards can save you a bundle this holiday season, but only if you use the right card and use it the right way. So here are some tips on how to pick the right holiday credit card and use it responsibly to save a lot of money.

Pick the right holiday credit card

Saving money with a card starts by picking the right kind of credit card for purchases. The best cards for holiday purchases fall into one of two categories: cash back rewards cards or 0% APR cards.

With cash back rewards credit cards, you get a statement credit or cash back based on the amount you spend. This is the easiest way to save money during the holidays. Simply use a cash back credit card, and you’ll save as much as 5% or more on your purchases based on the cash back reward offered by the credit card.

The second option is to use credit cards with 0% APR offers on purchases or balance transfers. With this option, you save money by paying off your holiday purchases over time interest free. And some of the best 0% balance transfer credit cards also offer 0% APR on purchases.

The balance transfer option can allow you to save money twice. Here’s how. Many stores like Macy’s or Kohl’s will offer discounts if you use their store credit card. I know because my wife takes advantage of these discounts all the time. With a balance transfer card, you can take advantage of the store discounts, and then transfer the balance to a 0% card.

Best cash back and 0% credit cards

So now the question is which credit cards offer cash back or 0% APR deals that are great for holiday shopping. Here are three to consider, two of which are Consumer Reports picks for the best cash back credit cards.

1. Discover More Card:

This card offers up to 5% cash back with no annual fee. And if you shop on Discover’s online shopping site, you can save as much as 20%. The More card also offers a 0% APR introductory rate on balance transfers and purchases. This card was a Consumer Reports rewards card pick.

2. 12 Month 0 Balance Transfer Citi Premium Select

At up to 12-months, the Citi Premium Select offers one of the longest balance transfer offer currently available. It’s regular APR is competitive, and it comes with no annual fee.

3. Blue Cash from American Express

Blue Cash is another Consumer Reports pick. The card offers up to 5% cash back, no annual fee, and 0% interest on purchases for up to 12 months.

Remember not to overspend

As rewarding as some credit cards can be, we must resist the temptation to overspend. Studies have shown that some people buy more with credit cards than they would with cash. Particularly with cash back cards, care should be taken not to buy more than you need. No matter how good the credit card deal is, you still have to pay back what you spend. So while these cards can save you money during the holidays, we still have to use them with care.

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Mint.com is offering free FICO scores to members. Today is the very last day, so don’t waste any time and go get yours now! I got mine with absolutely no problems. Please note that they provide only your score. If you want your entire credit report, you’ll have to order that seperately.

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LendingClub vs. Prosper

Today I received an email from Prosper to notify me that they are entering a quiet period, as they register with the proper securities authorities for a secondary lending market. What is a secondary lending market? It is a market where you can buy and sell loans that have already been originated. This provides additional liquidity, as you are no longer bound to wait 36 months until maturity and you can sell loans before they complete the full term.

In a typical secondary market, the net present value of a loan depends on the expected future cash flows and a discount rate. The discount rate is the interest rate on the loan often with an additional risk premium. When interest rates fall, the net present value of existing loans will rise. This is because older loans were originated at higher rates and are more valuable. When interest rates rise, the net present value of existing loans falls since new loans can be originated at higher rates and provide greater cash flow.

I have a feeling that at least initially, the Prosper market will not behave like a typical secondary lending market. I think that either one of two things will happen:

1. People that regret having tied up their money for 36 months will put their loans up for sale. In desperation they may be willing to accept very low prices for the loans. This will present a great opportunity for investors to purchase higher yielding loans.
2. People will be greedy and attempt to sell their loans for much higher prices than they are worth. Investors will not bother buying them since they can just originate more attractive loans. It would be an illiquid market, very much like the broader credit markets are right now.

It will certainly be interesting to see exactly what happens. Perhaps neither will happen and the market will function in a relatively normal manner. I’m sure that Prosper will probably provide some tools to provide guidance to those selling loans to ensure some liquidity within the market. Prosper will want the market to be as liquid as possible, because they will very likely receive fees for sales within the secondary market.

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A few weeks ago, I spoke about a family trip to the farmer’s market where we managed to buy all of our produce for $20. The cost savings of purchasing from the farmer’s market doesn’t cease to amaze me. This weekend we spent $15 on the following items:

• Basket of 7 (small – med size) tomatoes: $2.00
• Basket of green beans: $2.00
• 4 Golden Delicious Apples: $1.00
• 4 Red Apples: $1.00
• 2 Large Red Onions: $1.00
• 2 Large Onions: $1.00
• 10 Yellow Squash: $2.00
• 5 Cucumbers: $1.00
• 4 large Zucchini: $2.00
• 2 large Green Peppers: $1.00
• 2 large Red Peppers: $1.00

The cost of living where we live (Jacksonville, Florida) is relatively low, but regardless it provides a substantial savings on what these items would cost us at the grocery store. My wife says this shopping list would have easily cost double at Publix (the preferred grocery store in Florida), and the quantity of items would probably have been smaller. To ensure nothing goes to waste she cut up and froze a portion of the beans, squash, zucchini, and peppers. The onions can be cut and frozen as well, but we plan on using them soon. I still swear by the farmer’s market, and I highly recommend you check out the nearest one to you. It could save you hundreds of dollars a year on your grocery bills.

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This morning a friend of mine shared an article titled: AIG borrows 57 percent of government loan. The very first thought that came to my mind was, “I don’t remember hearing anything about AIG ever receiving any government loans.” The article states:

The U.S. government had originally said it would loan AIG, once the world’s biggest insurer, $85 billion, but increased that to $122.8 billion on Wednesday as the company races to sell assets to pay off the loan before the credit turmoil makes buyers harder to come by.

When I read this it made me sick to my stomach. Not because of the staggering sums of money being lent to AIG, but because it is not a government loan. My initial thought was correct, as AIG has never received any government loans. Granted Reuters is a British based company, but you would think that if they are going to report on U.S. financial news, they would ensure that their reporters understand the Federal Reserve System.

Unfortunately I would seem that such errant reporting is not limited to foreign reporters. Earlier this week, the New York Times reported that the Fed is purchasing commercial paper to provide some additional liquidity to the credit markets (I came to learn of the NYT article from MyTwoDollars). Within the New York Times article the authors state:

While the move will put more taxpayer dollars at risk, it underscores the growing sense of urgency felt by policy makers in a climate where lending has virtually dried up.

I’m not exactly sure how it puts more taxpayer dollars at risk, because the Federal Reserve is independent within government, and generates its own revenue with Open Market Operations. If you look at the Federal Reserve’s 2007 income statement, you’ll see no line items that indicate income from taxes. If the Fed incurs any losses, they would be losses for the Fed not taxpayers.

With all of the recent focus on the Emergency Economic Stabilization Act of 2008 (aka the $700 billion “bailout”), the media finds it convenient to label everything as a government-sponsored act. It is sensationalistic and inaccurate to equate the actions of the Federal Reserve as actions of the U.S. government. The next time you see the Federal Reserve and the U.S. government mentioned within the same article, be sure to take what you read with a grain of salt. It is likely that the author may not really understand how the Federal Reserve System works.

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