How to Manage Credit this Holiday Season

Holiday shopping takes up a considerable amount of time between Thanksgiving and Christmas Day. Shoppers who scour in-store and online retailers in the hunt for the perfect gift annually spend hundreds of billions of dollars during such pursuits, and what they swipe when making purchases could go a long way toward how their new years begin.

Overreliance on credit cards to make holiday purchases can prove crippling once the calendar turns to January. According to an analysis of statistics from the Federal Reserve, the average household consumer debt in the United States was more than $15,700 as of June of 2015. That’s roughly one-tenth the average mortgage debt, suggesting that many consumers are relying too heavily on credit cards when making their purchases.

This holiday season, consumers concerned about swiping their credit cards too often can take the following steps to more effectively manage their credit.

· Know what you can afford. Swiping now and dealing with the consequences in January is a recipe for a rocky new year. In some cases, it can benefit consumers to make purchases with their credit cards as opposed to their debit cards. For instance, when making purchases online, it’s often safer to use a credit card rather than a debit card linked to your checking and savings accounts, as using the latter can make your life’s savings vulnerable to hackers. But don’t start swiping your credit cards until you know what you can afford. Examine your finances and only use your credit card if you know you can repay the balance before it incurs any interest. If you can’t pay the balance in full at the time the payment is due, use a debit card so you are only spending money you already have and not taking out what amounts to a high-interest loan on your holiday purchases.

· Resist retailer cards. When making in-store purchases, chances are the cashier will invite you to sign up for a retailer credit card, even offering an immediate discount if you do so at the registers. While this discount may seem too tempting to ignore, keep in mind that many retailer credit cards come with considerably higher interest fees on balances that are not paid off in full. So that discount at the register may end up costing you more money if you get to January and can’t pay the balance in its entirety.

· Try not to juggle cards. Many shoppers juggle multiple cards to avoid building up too big a balance on one particular card during the holiday season. But that’s an easy way to lose track of how much you have spent. Rather than juggling cards, use only the one with the lowest interest rate.

· Monitor your balances. Swiping a credit card is easy and hassle-free, and many retailers both big and small now accept various types of cards. Keep a close eye on your balances, checking them online after each shopping trip. This can help you control your spending and also can alert you to any fraudulent activity.

Shoppers who must use their credit cards this holiday season can employ several strategies to ensure they don’t dig themselves into a financial hole by the end of December. GG159504


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