5 Best Practices for Credit During December Shopping

With Black Friday and Cyber Monday now in the rear view mirror, consumers who wanted to avoid the hustle and bustle of these shopping holidays may now begin their quest to find gifts for the end of the year. Although commencing this task on calmer days can ease your stress, you still want to make sure to not let your credit get out of hand.

December could see an increase in spending, so that is why it is important to make sure not to let your finances get out of hand. Extravagant purchases during this time of year can lead to your credit score taking a hit and your bank accounts getting drained. You may already be dealing with stress during this time of year, so being smart with your credit can help you avoid more of it. By avoiding these common mistakes, you will be able to enjoy this joyous holiday season.

Make a list, check it twice

December is a prime time for consumers to overspend and they may not even know it. Waiting in the checkout line and noticing that you are about to purchase more than you intended can be quite the reality check. Being a cheerful shopper and getting gifts for everyone you love may be a nice game plan, but this cheerful attitude can lead to some financial missteps.

In order to prevent the dreaded holiday shopping overload, it helps to make a list and check it twice. Creating a list of who needs what can help you build a feasible budget and prevent you from falling deeper into debt. It will also ease the stress of figuring out what gifts to get everyone.

Opening new lines of credit

Along with overspending, opening up new lines of credit can negatively affect your score. If you open a credit card up with the sole purpose of short term gift shopping, you run the risk of hurting your credit in the long run. These new lines of credit will build up more debt and hurt your score. Having some internal strength when it comes to overspending and opening up new credit can be your best ally during the holiday shopping period.

Getting a cash advance

Experts recommend doing your holiday shopping with cash. This will help you from running up your balance and prevent identity thieves from stealing your personal information. Although this is a smart way to go, there are best practices when it comes to using cash for shopping.

Many credit cards offer giving you the cash advance option. This choice lets you get a cash loan from a credit card or an ATM. Even though this is a quick way to get a few extra dollars for holiday spending, it actually will negatively affect your credit. The fees are regularly very high and interest rates, which can get up to 20 percent, begin to take hold of your credit. The cash advance option is on there for emergency purposes so it may be wise to forego this alternative come holiday-spending time.

Low interest rate cards

As you begin to do your holiday shopping with a credit card, you may want to consider the future. Figuring out how you will pay off your credit card balance for all these items can help you better prioritize your shopping and avoid hurting your credit score. But if you know beforehand that you are going to be in a tough financial pickle and don’t see yourself taking care of your balance right away, your best bet will be to use a credit card with a low interest rate.

A card with a low interest rate will help ease any expensive interest charges, which will aid you when you have to begin paying back your balance. A higher interest card will run up charges, which will in turn make it more difficult to pay. This option will not totally prevent your balance from being erased, but it will create a better, more stress free situation for you.

Investigate layaway

It is all not doom and gloom when it comes to shopping during this time of year and a very helpful option to pay for gifts is signing up for a layaway plan. Many retailers offer this plan in order to help shoppers pay for a large purchase over time. It is a easy way to ease the stress of the holiday season and get the gift you want. But before you decide to go this route, make sure you read the company’s policies about the plan. You don’t want to blindly sign up for a plan and then find out later on they charge expensive interest or tack on fees. But if you find a plan that suits you, go for it.

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