4 Signs You May Be Overusing Your Credit Card During the Holidays

The holidays are a time when you may be charging everything to your credit card. From buying gifts for your loved one to purchasing decorations to help make your home look as festive as possible, there are many holiday purchases that will begin to add up over time. Even though the holidays can be a busy time of year, it is important not to let your spending get out of hand.

On top of making your home looking like a winter wonderland, you should keep a close eye on how you use your credit. If you haven’t checked the state of your finances recently, then you may be in the red. If you feel that you have committed any of these credit pratfalls, chances are you have spent a little more than you can handle this season.

Not having a set budget

Creating a list of who and what you need to buy for can be a great way to get your holiday shopping organized, but if you haven’t created a budget, chances are you may be overspending. Going to the mall or shopping center with a cavalier attitude can result in you purchasing everything you want and using your credit card for more than you should.

In order to counteract this type of overspending, spend a few minutes before your shopping excursion to write down a list of everything you need and creating a budget around that. Setting a spending limit for yourself will help you avoid buying everything in sight and running up your credit card. You will be thanking yourself at the end of the day for this helpful measure

Forgetting how much you have spent

We have all been in that situation where you are with your friends, having a good time and then the question gets brought up of “how is your holiday shopping going?” This can either be a simple question to answer or a tough one depending on how much you have spent. It will be even harder to answer if you have no earthly idea of how much you have been spending. If you find yourself in this camp of not knowing how much you have spent, then chances are you may have bought a little too much so far.

Figuring out how much you have spent this time of year is one of the simplest things to do. It is a painless step that requires only a few minutes of your time. You can make sure that you are not in a pool of debt by simply checking your credit card statement and bank account every day. Many credit card providers let you check out bank statements on their websites. If you are constantly on the go, you may want to investigate whether your credit provider offers mobile banking. This option can be as easy as opening up an app on your phone or sending a quick text to see where your balance is at. Quickly checking your finances before you begin your holiday shopping expedition can help you curb your spending habits.

Debt-to-credit ratio

As you are checking the state of your credit, make sure to write down how much you have spent in the last few weeks. Spending outside your budget can drain your finances, but it can also hurt your credit score, especially if you are using your card so much. A good barometer to see if you are using too much credit is to see where your debt-to-credit ratio is at. This stat shows how much you are borrowing in relation to the credit limits you are allowed.

As you are getting all of your holiday spending completed, be sure to take a quick second to see where your ratio is at. There are many online apps you can use to figure this out, so it will not take that much time to complete. FICO recommends your ratio being no higher than 20 percent of your available credit. You can get your score to a lower level by making more income, but this is easier said than done. A simpler way would be to pay your debts quicker, but make sure you are making these payments on time.

Forgetting to make payments

As the holidays becomes busier, you may forget a few things. But one thing you don’t want to forget about is making minimum payments on your credit card. Forgetting to make a payment can be one of the quickest ways your credit can take a huge hit. Late fees and interest can result in expensive charges and only drag you into debt further.

Setting a reoccurring notification on your phone or writing it down on a calendar is the best way to get yourself under control during the holidays.

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