Tis the Season of Credit Card Overspending

by: Bryan Dufresne

Plan Ahead to Keep your Holiday Spending in Check

On the first day of Christmas my true love gave to me “more credit card debt”. All kidding aside, you will not see this slogan on very many people’s Christmas wish lists this year but that is exactly what most people are going to end up with come January.

More retail spending occurs in the month of December than any other month of the year, so let’s take a look at some of the way’s you can manage your Christmas spending this year to avoid a debt hangover in January.

A trap that most of us fall into is that we don’t plan adequately for our holiday expenses even though December 25th has been on our calendars as a holiday for our entire lives. We all know the holiday season is coming, yet year after year we make the same spending mistakes over and over again.

People spend during the holidays without regard to what they can actually afford caught up in the good tidings the holiday season ushers in and the clever marketing campaigns of billion dollar companies in the media. By the time the dust settles in January and the mailman delivers a cold dose of reality that is called the “credit card bill” the panic button is hit and the next 6 - 8 months are spent paying off the damage in interest charges.

If you would like to avoid this yearly cycle of debt and use a credit card to your advantage during the holiday season here are a couple of things to consider:

Just can’t avoid carrying a balance after the holidays?

If you know you will carry a balance on your credit card after the holidays you could start studying credit card applications now to find one that offers a 0% introductory APR rate and low fee for balance transfers.

Instead of accumulating the interest in the months following the holiday you can move your balance to another credit card and pay no interest on the debt during the introductory period.

Although low interest balance transfers are becoming less common there are still some credit card offers that have a 0% interest on balance transfers for an introductory period of 6 months to 1 year typically.

Please keep in mind that there is typically a fee associated with transferring balances to a new credit card called the balance transfer fee.

Check the terms and conditions of each card offer closely but don’t focus solely on the balance transfer rates and fees though as you will also want a card with an excellent APR for purchases if you plan on using this card for regular purchases after closing the account for the old credit card.

Are you a responsible spender?

A great way to save money through the holidays is to have a cash back credit card that awards you money when using your credit card to make purchases.

The rate of cash back typically varies from 1% - 5% , and the types of spending habits that you will be rewarded for also vary by card offer. Many cards will offer double the cash back for spending at gas stations, grocery stores or your favorite retail outlets for example.

Just remember that this type of card will really only benefit you if you pay your credit card bill by the due date each month.

If you are carry a balance with a cash back card the interest debt you will accumulate will outweigh the cash back that you have earned.

Additionally, failure to pay your bill on the due date can negate the rewards you have earned according to some cash back card’s terms and conditions so be careful using this type of card.

Holiday Spending Tips

By timing your transactions well, you can get between 45 and 59 days of interest free credit. Delaying your purchases until just after your statement date can give you almost two months’ grace before you actually need to pay for the items on your bill.

However, this interest-free period vanishes if you don’t pay off your bill in full in the new year.

The cold card truth is, know when enough is enough and stop spending. There will always be that one more “great” deal advertised on tv that you simply “have to have”.

When you are handing over your credit card to the store clerk during the holiday season try to envision it as cash in your hands. Too many people don’t see a plastic card as an expense until they actually have to pay the bill.

Keep the gift giving reasonable. There is no prize for reaching your credit limit.

Of course if you do need a credit card this holiday season we have you covered!

Credit Card Applications

About the Author:

Bryan Dufresne is a writer for Cardpick.net the top credit card applications website on the internet.