Smart tips for responsible credit card use during the holiday season
Nothing brings on the post-holiday blues like receiving a credit card statement with a number that makes your stomach clench. Even the most financially responsible people can be swept up in the excitement of the season of giving and overspend on their cards. Here are a few Do’s and Don’ts to follow this holiday season so you can start the New Year with a clean slate instead of holiday credit card debt:
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Do: Understand your current credit card rewards
The credit card already in your wallet could have additional perks or rewards for holiday shopping that you never knew about such as cash back from certain retailers, or for purchases made during Black Friday and Cyber Monday.Â Review your credit card agreement or talk to a customer service representative to learn about how your card can make your holiday budget go further.
Don’t: Chase rewards at the expense of your overall budget
Credit card rewards are a great way to get more out of every dollar, but don’t make the mistake of charging items you can’t afford to earn a free airline ticket or percent off a purchase. You can end up paying more in interest payments than the money you “saved” with rewards. Your first priority should always be spending within your budget.
Do: Thoroughly budget your holiday spending
Before you make the first trip to the mall after Thanksgiving take the time to write out a complete budget for the holiday season. Knowing how much you can spend on gifts, dĂ©cor and meals will help keep your spending habits on track. Consider doing more shopping online with your holiday credit card to make it easier to stick to the budget. Shipping and handling charges can add up to the same amount you’d spend on gas and power snacks driving all over town to shop, plus you can avoid the headaches and stress of packed malls and post offices. Also, having email confirmations of purchases makes it easier to track spending than juggling a wad of paper receipts.
Don’t: Spend money you don’t have
Many people feel a lot of pressure to make the holidays magical and exciting, but don’t succumb to the idea you need to break the bank to make it a season to remember. There are plenty of ways to enjoy the holidays with your family without running up holiday credit card debt. Consider making decorations together instead of buying them, giving home-made gifts instead of expensive presents and drawing names for large families instead of buying gifts for everyone.
Do: Sign up for a holiday credit card that offers rewards or discounts with a wide range of retailers
If you’re looking for a new credit card before the holiday season select one that offers rewards, discounts or cash back programs with a wide variety of retailers. Some cards have partnerships with hospitality groups while others offer discounts with retail groups (such as Gap Inc., which includes Old Navy, Piperlime and Banana Republic). Discover cardmembers can use their rewards to purchase from thousands of retailers on Amazon.com.
Don’t: Sign up for credit card offers at every retailer
As you go about your holiday shopping nearly every major retailer will ask if you’d like to sign up for their credit card to earn a percent off your purchase. Don’t be tempted to say yes to every one of these offers. Every time you apply for a line of credit an inquiry is made by a financial institution to decide whether you will be approved or denied for a line of credit. 1
Do: Keep a close eye on your credit card charges and balance
Chances are you’ll use your credit card at a wider variety of stores and websites in December than any other month of the year. While credit card purchases are usually more convenient than carrying cash for presents, numerous transactions can open you up to additional risk for credit card fraud. One way to protect yourself is to keep a close eye on your charges during the holidays so you can spot any unauthorized charges and immediately report them to your card company. Also, if you’re signing up for a new card before the holidays be sure to look for one that offers fraud protection, alerts and other security services.
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Don’t: Ignore your statement until after the holidays
It can be all-too-tempting to put your credit card balance out of your head and only focus on parties and presents during the holidays. Resist the temptation to “just deal with it after New Year’s” or you could seriously overspend your holiday budget. Call your customer service line or check the balance online if your card offers online account management at least a couple times during the holidays to get a reality check on how much you’re shelling out for the season.