Holiday Credit Card Tips

The holiday shopping season is upon us! It’s easy to get distracted from your financial responsibilities because of the excitement and joy of the season.

Even the most financially savvy individuals can be guilty of this. Overspending with credit cards is one major financial distractions. Set yourself up for success in 2020 by knowing what credit card risks to avoid this holiday season.

Determine Your Budget

Unsure what your budget should be? Make a list of everyone you plan to shop for and how much you would like to spend. Then, review your monthly income and expenses. How much can you reasonably afford to spend while being able to pay your credit card bill in full when the statement arrives? Ensure what you’ve budgeted and what you can afford match. If not, you’ll want to revisit your budget.

If you’ve already started holiday shopping, it’s not too late to budget! Track how much you’ve currently spent then follow the steps above. Ensure your final budget accounts for the gifts you’ve already purchased.

Be Wary of Store Cards

During the holiday season, it may seem like every time you checkout, you’re offered a store credit card. While the incentives may seem enticing, be wary of applying. Many store credit cards have higher interest rates than a regular card. Additionally, every time you apply for a credit card, a credit inquiry is made by a financial institution to determine your eligibility. Applying for many credit cards in a short period of time may lower your credit score. Bottom line: be cautious at the checkout line. Weigh the pros and cons of the store card before saying “yes” to a credit inquiry.

Don’t Max Out Cards

Carrying high balances on your credit card may reduce your credit score. Your credit utilization ratio (how much of your available credit you’re using), plays an important role in determining your credit score. To avoid maxing out your credit cards, follow these tips:

  • Choose one credit card to use rather than maxing out multiple cards. Review your credit card rewards and consider using the card that offers the best rewards for your financial situation.
  • Track your spending habits to ensure you’re on budget. Monitor your credit card balances online, or through your credit card provider’s app. Consider setting up text or email alerts when your balance reaches a certain level.

Don’t Ignore Your Statements

Resist the temptation to deal with your credit card balance until after the New Year! Set yourself up for financial success in 2020 by reviewing your statements for accuracy. This is also an opportunity to temp check your holiday spending budget. Pay off as much of your balance as you can reasonably afford based on your monthly income and expenses. The quicker you pay off your balance, the less interest your purchases accrue.

If you have any questions about your credit, or if you’re in the application process, reach out to your loan officer prior to opening new accounts or making large purchases.