The holiday season can be a threat for credit cardholders. Many consumers find themselves stuck in debt when the holidays are over. How can you avoid Christmas debt this year? Consider the following tips on how you can use your credit card more smartly:
1. Don’t max out your credit card limit on gifts.
This can be a season of giving gifts but be careful about charging purchases to your credit. Paying with a credit card can be a convenient way to buy gifts but if it would mean maxing out your credit line, you run the risk of not being able to pay off your full balance. Even worse, your personal credit score can badly suffer.
How can you avoid maxing out your limit this holiday season? Make a list of the people you want to give presents to. Consider the gift you will buy for each person. Set a definite budget on gifts alone. Decide how much you plan to charge to your credit card and how much you will buy in cash.
You should also check your current credit card balance before heading to the department store or supermarket. This way, you can be sure to leave at least 50% of your limit free from charges this season.
2. Be realistic about what you can afford.
How much can you afford to spend on gifts? Don’t forget other expenses that you will be confronted with in line with the holidays such as food. If you are planning to spend the holiday on vacation, do you have enough savings for that?
Always consider your future obligations. If you plan to use your credit card for holiday expenses, see to it that you will be able to pay off your balance on time. Keep in mind that carrying a balance would mean paying additional interest rate charges. Save yourself from the stress of struggling with repayment by avoiding unnecessary debt this holiday.
3. Don’t get new a credit cards or retail store cards for the wrong reasons.
A lot of credit card issuers and retails stores take advantage of the holiday season by offering exclusive discounts for cardholders. It can be tempting to apply for a new card but don’t forget to weigh the pros and cons before you sign up.
Avoid submitting too many credit card applications to different issuers at once as this can badly pull down your credit score. Furthermore, having too many cards also increases the risk of overspending. If you already have a credit card or two, then you should make the most out of it.
4. Not checking your credit card billing statement after the holidays.
As soon as you receive your credit card bill, examine the details and make sure that there are no errors or unauthorized charges. Errors can sometimes occur in billing and if you don’t make the effort to check your account statement, you could end up paying for debts that you did not owe.