The holiday season is almost here. If you haven’t started yet, you’re probably beginning to think about your holiday shopping list.
As you know, the costs can add up over the holidays. But with some pre-planning and responsible use, a credit card can help you pay for your travel arrangements, the holiday feast and gifts for everyone on your list.
Tips for smart credit card use
Here are five tips to help you use your credit card for holiday purchases, without racking up interest or hindering your credit score.
Set a budget and stick to it
This is the simplest advice we can offer. Resist the temptation to use your card for impulse purchases or purchases that exceed your budget. This will help you keep your monthly payments lower and reduce the amount of interest you’ll pay.
Look for cards with rewards
If you’re looking for a card to use over the holidays, watch for cards with sign-up bonuses and rewards.
Many cards offer rewards that can be used for cash-back, gift cards, travel benefits and more. All for simply using your card for purchases. Who knows? With the rewards you earn, maybe you can get yourself a gift after the holidays are over!
Target the larger purchases with your card
For the smaller purchases, consider using your debit card or cash. Try to only use your credit card for the more expensive items on your holiday list. This will help you limit the amount you have to pay back after the holiday season.
Make a plan to pay off your balance
Ideally, you’ll never carry a balance on your credit card from month-to-month. This helps you avoid paying interest. But during the holiday season, you may have to spend a little more. In that case, you’ll need a plan to pay off your balance in a reasonable amount of time.
When you’re getting ready for holiday shopping, review your budget. Divide your budgeted amount by the number of months you want to pay off the balance in. Remember to factor in any interest you may accrue from month-to-month. The result is your monthly payment amount. There are many credit card payment calculators online to help you figure out your monthly payment amount.
Don’t miss your payments
Missing a payment or paying late could have the following negative effects:
- Late fees
- A penalty interest rate, or loss of promotional interest rate
- A negative impact to your credit score
Financial advice for the holidays
We’re here to help you set a budget and find the right financial solutions for your holiday shopping. Fill out the form below and our community inclusion team will reach out to schedule a 1-on-1 meeting.
Or, visit our financial education page for more tips.
