The holiday season is in full swing. As you join the ranks of Christmas shoppers, you'll find plenty of ways to spend your hard-earned money. Using a credit card makes shopping easy; so easy, in fact, that many Americans will spend too much this month. Yet Christmas shopping does not have to lead to credit card debt. This year, you can take steps to avoid a gloomy credit card statement in January.
Create a Budget
Before you set out on a shopping spree, think about how much you plan to spend. Make a list of the people you need to buy gifts for. Set a limit for each present. If you're on the hunt for decorations, baking supplies, or wrapping paper, add those items to the list. Then estimate your total costs.
Using a credit card to buy the goods on your list can make shopping easy. Just be sure that you know what the credit limit is. Also, plan a way to pay back the credit card balance. Some experts advise spending only what you can pay off in three months. So if you can put $200 toward the credit card bill in January, February, and March, then keep your spending under $600 (you may have to pay a bit more depending on your card's interest rate). Others suggest running a balance that you can pay off within one month. Whatever you decide, make sure your plan is practical and works for you. With a budget set in place, you'll spend within your means and feel better about it, too.
Get the Most out of your Credit Card
As you use a credit card for holiday shopping, you'll want to make sure you get as many benefits as possible from it. Check for rewards or cash back offers; these can add up fast over the holiday season. If you plan to carry a balance for a few months, use a credit card that has a low interest rate. This will help you save on interest expense in the coming year.
Many stores offer discounts, such as 10% off, if you sign up for one of their cards. Before adding another card to your wallet, however, consider the long-term effects. Signing up for too many credit cards can affect your credit score. It may appear to lenders that you are short on funds or that you are overstretching your credit. Also, many store credit cards come with a high interest rate. If you do not pay off the balance right away, you could get caught paying much more than you initially saved. Your best option might be to stick with the Visa or MasterCard that's already in your wallet.
Stay Safe Online
Shopping online for Christmas is convenient and fast. But before you electronically swipe your card, make sure the site is safe. A padlock on the screen indicates the page is secure. You can also check for "https" at the beginning of the web address - the "s" show that the page is safe. Finally, look at the total amount before you make the purchase. Shipping costs and other charges may be added on to the original price.
By following these steps, you can take charge of your credit cards this year. You'll make smart, planned purchases. And you'll avoid high credit card debts during the upcoming year.
The most popular benefit is points of one sort or another. These can go towards travel, cash back, gas or other things, depending on the kind of program you join. If you aren't carrying a balance and the card has no annual fee, these can be a great deal.
On the other hand, carrying a balance with a points credit card can mean that you are paying more in additional interest than you are gaining from the points. It is not always worth it.
What Do You Need to Look At?
The first question you need to ask yourself as you shop for a credit card is why do you need it?
Suppose you are trying to break away from a higher interest rate card, for example. A good card for you will have a low or even 0% introductory APR, and no balance transfer fees. You will want to look at how long the initial APR lasts and what the final APR will be.
On the other hand, if you aren't needing to transfer a balance these features will be of less interest. You will want to think about if you will be carrying a balance or no, and picking the features and APR that will best suit your needs from there.
Seek Out Credit Card Offers
Get ready to take some notes. Start taking notes on the credit card offers that appeal to you. You can do this on paper or on a spreadsheet if you are comfortable with these. What you want to do is make it easy to compare the features of each card you are considering.
Do not start applying for cards yet.
Divide your notes into columns, one for each feature, and each card on its own row. Look at a number of cards, ruling out any that obviously aren't what you need (high interest rate cards, for example), but noting any that are even slightly of interest.
Take a look at what you have found and compare it with what you are looking for in a card. One or two should have the strongest match to what you are after in a credit card.
I generally prefer online credit card offers for one simple reason - you get far more of them. The ones in the mail can be quite good, but odds are you can find them online too, along with offers you haven't received in the mail. But online offers have the advantage that you get your answer in minutes, rather than days or weeks. All you have to wait for is the actual card in the mail.
Smart shopping for your credit card means you will get the best benefits from your card. You won't regret the time spent when you know that you've picked the exact card for your needs.
Both Edward Vegliante & Stephanie Foster are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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