Holiday spending in December is almost inevitable. Practically the minute Thanksgiving is over, Christmas sales come out in full force for Black Friday (and Small Business Sunday, and Cyber Monday… you get the idea). Not to mention, we also mail money and gifts to our familia. Even once the holidays are over and the few extra pounds worth of arroz con frijoles y lechón kick in, gift cards and returns encourage another round of spending. It never ends!
Unfortunately, all of these temptations can be dangerous for our wallet and credit if handled the wrong way. According to American Research Group, the average expenditure an American family plans for gifts alone during the holiday season is $800, and often ends up being even higher than that. 37% of Americans are using credit cards for their holiday spending, which means this payment is often offset past the holidays.
As most people know all too well, credit card spending can cause us to spend unconsciously, unless us reach our card limit. As such, it can be a real struggle to get through the holidays without completely ruining your existing budget. But, instead of ditching credit card use entirely, it makes sense to strategize around using credit cards responsibly.
Credit card use can make our life easier when shopping, especially online. Here are some tips for using credit cards and keeping to a budget during the holidays.
Check Your Credit Card Report
Before jumping straight into holiday shopping, make sure that you have checked your credit score, which is partially based on your credit card report. It is extremely important to know your credit standing before going crazy with all the things you want to buy for las fiestas. However, this doesn’t mean that if you have great credit you should just go on a shopping spree with your credit card!
Your credit score is the biggest indicator of our overall financial health. If you don’t already know your credit score, MoneyMio can give you an indication with the credit score estimator tool that takes just 60 seconds.
Checking where you stand with your credit score also helps you to find out if you need to:
- Improve on-time payments
- Lower credit card balances
- Fix any credit problems
Finding any problem with your credit card can help you adjust your holiday shopping budget, and can help you plan better in general.
Set Expectations
Unplanned holiday spending brings about a bigger chance of overspending. To avoid this, make sure to set an expectation for how much money you’ll spend – per person, and as a total amount. Make a realistic budget that does not strain your finances.
Before starting your holiday shopping, make sure to settle your highest priority bills, then check your available credit. It’s certainly not encouraged to use your entire credit limit, but it helps to know where you stand so you don’t go over.
Once you know your limits, create a list of who you’ll be buying for, what you plan on buying for them, and an estimate for how much everything will cost. Set aside some of your holiday budget for contributions/hostess gifts at any holiday parties you will be attending, ‘secret santa’ gift exchanges at work, and other non-family holiday spending.
Use Your Zero Interest or Reward Credit Cards
One of the main things every cardholder wants to avoid when using credit cards are the interest charges. If you no longer enjoy the benefits of 0% introductory rates, you’ll want to pay your statement balances in full to avoid these fees.
If you don’t have a zero interest or rewards credit card, and were thinking of getting one, here are some options:
- No annual fee
- Earn 5% cash back on up to $1,500 in a combined purchase in selected merchants
- From October through December, department stores, wholesale clubs and drug stores earn more cashback
- Earn 1% unlimited cashback on all other purchases
- No annual fee
- No late fees
- No penalty rate
- 0% intro APR for 15 months on purchases and balance transfers
- After variable APR of 13.24%, 18.24% or 23.24% applies
- Pay no balance transfer fee when you transfer a balance during the first 60 days your account is open
- After that, the fee for future transactions is 3% of the amount transferred, with a minimum of $5
- No Annual Fee
- No annual fee
- Zero liability fraud protection, so you’re not responsible for any fraudulent charges made on your account
Bottom line, successful holiday spending comes down to being a responsible shopper. No matter how much you check your credit score, card limit or report, the main tip is to practice self-control. It’s easy to get carried away with holiday spending, but always remember to be responsible and to keep your priorities in mind. The holidays are much more enjoyable without any spending stress, and tasty coquito!
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