Christmas is the time of year when everyone promises to keep the credit cards at home, but then hundreds of dollars suddenly find their way onto those card balances. It seems evil, but it really isn’t.
The problem is the love/hate relationship that consumers have with Christmas itself. People love getting gifts, but they hate feeling pressured to buy gifts for others. You can’t have it both ways. If you like getting gifts, then be prepared to give some back. Instead of coddling that credit card like it is a rare China doll, you can employ some spending techniques that will allow you to use your card and keep your dignity.
Start Buying Early
For many consumers, Christmas shopping starts on Black Friday, stops for a few weeks, and then finishes in a flash of light and a clap of thunder on Christmas Eve. There are a lot of reasons why this method of buying is bad for you, but the biggest reason is the hit that your credit card takes.
Instead of spending $1,000 on your credit card in the time between Black Friday and Christmas Eve, you should start shopping in January and buy gifts all year long. If your monthly credit card payment is $100 per month and you spend $100 on gifts, then you can at least feel like you are breaking even.
Of course, most consumers know that a good portion of their $100 monthly payment goes towards interest and service charges. There is also the very real chance that the card will get used for something other than Christmas gifts throughout the year.
If you really want to feel like you are staying on top of things, then take a look at your bill and find out exactly how much you are paying each month towards your balance. If $45 of your $100 payment is going towards your balance, then make a $155 payment each month and that will cover the $100 you spend on Christmas shopping.
Stop Opening New Accounts
Christmas is a time when online and offline retailers will offer gift certificates and other incentives if you open an account with them. Each credit account that you open shows up as an inquiry on your credit report. There is no exact formula for determining how many credit inquiries is too many, but your chances of getting a good rate on a future car loan could be hampered by an excessive amount of inquiries on your credit profile.
The temptation to open a new credit account with your favorite retailer is strong during Christmas, but look at it in a more practical manner. The interest rate on your Visa or MasterCard is probably much lower than the 20 or 25% that the retailer will charge you in interest. The chances are also pretty good that the retailer already takes Visa and MasterCard, which means that you do not need a store account to buy from their store.
Set Limits For Everyone And Stick With Them
Remember how important the size and quantity of your Christmas presents were when you were a kid? Well, hopefully you have matured a little since then and realize that everyone needs to have a spending limit. Before you pull out your credit card to start shopping for Christmas, you should have a Christmas list handy and a set amount you are willing to spend applied to each person. No matter what, you cannot exceed those limits.
Of course you would love to get your mother that diamond ring for Christmas and you have room on your credit card for it, but is it really necessary? Besides, mom would appreciate a piece of jewelry that is just as lovely, but not nearly as expensive.
Your credit cards are not your enemies, even when Christmas rolls around. If you know how to manage your credit accounts and control your spending, then you can have an amicable relationship with your credit cards all year round.