Credit Cards and the Holidays

Credit Cards and the Holidays

Plan on doing some holiday shopping this month?  If so, there’s a good chance that you’ll be using a credit card for some or all of your holiday purchases.  And, while there’s nothing wrong with responsible credit card use, the hectic holiday schedule of parties, shopping, and traveling can make even the most financially savvy folks a little scatterbrained, especially when it comes to spending and credit card use.

That’s why I thought I’d kick December off with a few tips for keeping your credit (and your credit score) in check during the busy holiday season.

1. Avoid the store credit card discount trap. Most retail stores offer their own credit cards.  And the ones that do typically offer some sort of incentive – such as 15 or 20 percent off of your purchase – when you apply. These offers can be especially tempting during the holiday season when you’re spending more than usual, but don’t give in to that temptation.  First of all, opening too many lines of specialty store credit at once can ding your credit score.  What’s more, if you don’t pay the balance right away, you’ll pay interest on your purchases, which will make that 15 percent discount pretty much a wash.
2. Use the credit card with the highest limit. One factor that affects your credit score is your amount of available credit compared to the amount of credit you are actually using.  The bigger the difference between those two numbers, the better you look in the eyes of the credit agencies.  For example, spending $1,000 on a card with a $10,000 limit looks a lot better than spending $1,000 on a card with a $2,000 limit. This is good to keep in mind if you plan to use a credit card for large holiday purchases.
3. Set a spending limit – and stick to it. The biggest problem with credit cards is that they make it way too easy to overspend – especially during the holidays, when nearly everyone is spending more than usual. And while it’s easy to turn a blind eye to overspending in December, the bill that comes in January can be a rude awakening.  If you want to avoid overspending this year, set a strict spending limit.  Stick to it and track your credit card purchases carefully.  If you don’t think you can curb your credit use, you may want to leave the plastic at home and stick to a cash-only holiday spending policy.
4. Don’t slack off on security. The holidays are a busy time, and when you’re doing a zillion things at once it’s easy to get a little careless or forgetful.  But ‘tis definitely NOT the season to let your guard down, especially when it comes to credit cards!  But there are several things you can do to keep your credit card information safe:  When you’re out shopping, take one card with you and leave the rest at home.  After you make a purchase, take the time to make sure that your card is safely in your wallet.  Prefer shopping online?  Before you buy from an online retailer, make sure that the site’s URL begins with “https.”  That “s” at the end stands for “secure,” so if you don’t see it, don’t shop there!
5. Don’t forget to make your monthly payment(s). December is a busy month, but whatever you do, don’t let your credit card payment due dates slip by unnoticed.  Pay early, if possible.  If paying early isn’t an option, create a few reminders to help you stay on top of your payments (smartphones or email programs are especially useful for this).  This goes double for folks who are still paying their credit card bills the old-fashioned way:  Snail mail is notoriously slow around the holidays, so if you must mail your payments, it’s a good idea to allow about a week of extra time to ensure you aren’t late.
6. Take the time to read your statement. Yes, you’ll be busy this month, but it’s still important to take the time to read your credit card statement before you pay it – especially in December, when scammers often try to slip purchases past harried consumers.  Read every single word of your statement before you pay your bill, and if you see anything fishy, reach out to your credit card company right away (and if you need to file a dispute, see last month’s post for a play-by-play of what to expect).

The holidays are a busy, crazy time – but they don’t have to wreak havoc on your credit!  By taking a little extra time for planning and keeping security in mind, you (and your credit score) can have a very happy holiday season!

Have a great and safe December!  And happy holidays!