Ready to do this year’s shopping spree? The Christmas season is known to be the most costly time. Obviously, lots of people tend to spend more money during the months of November and December and preparation for the Christmas Eve as well as the New Year.
Depending on the merriment and celebrations, consumers must also be aware of their spending to prevent holiday debt. Nobody wants to get up the next morning in the New Year stuck in a pile of debt, not knowing where to start with repayment
The best way to start the year right and stress-free is to avoid holiday debt. By this, we mean credit card debt. Indeed, many credit cardholders are guilty to maxing out their limit, buying gifts and spending on food – charging everything to credit. Sure enough, having a credit card is a convenient way to purchase but don’t forget that you are still spending real money.
Just because you’re using plastic and not spending cash does not mean you are paying with real money. Even if a credit card gives you the opportunity to buy what you want now and worry about repayment later, the expenses you incur are far from a dream.
Therefore, you should seriously consider your repayment obligations before charging anything to your credit card – especially this holiday season. Consider the following suggestions on how you can avoid sinking into bad debt this year:
Buy gifts in cash. If you want to buy gifts for friends and family, don’t charge everything to your credit card. Even if you own two or more cards, set a spending limit and seriously consider how much you can afford to pay in full for each account.
If you will use your credit card to buy gifts for everyone, there is a danger of maxing out your credit which can lead to debt build-up and can pull down your credit score. Keep your credit card charges minimal even during the holidays, making sure that you leave at least 50% of your credit limit free.
Don’t buy all your gifts. Instead of giving something readily bought from a store, why not consider making your own gifts for some of your friends and loved ones. If there is a craft that you enjoy doing, buying craft supplies can be so much cheaper than buying an item sold at handmade shops.
It would even make your gift more special because of the time, effort and love that come in creating that gift. If you plan to do this, be sure to start early so you can finish your projects in time for the Christmas party.
Plan your credit card repayment strategy. Do not blindly charge expenses to your credit card without a clear plan on how you will pay off your balance. It’s best to pay your full balance so you won’t have to incur interest rate fees. However, if you need to carry a balance, be sure to pay as much as you can instead of just paying the minimum due required by your issuer.
