MAKE THE NICE LIST WITH YOUR CREDIT CARD USE
The holiday spending season begs the question: how to pay for all that joy? It’s tempting to turn to plastic to help finance the holiday season. The average American plans to spend $812 on the holidays this year.
Let’s look at some “naughty” and “nice” ways to use your credit cards during the holidays.
❌Naughty
If you don’t have the money to finance your gift-giving, it’s tempting to pull out a credit card and shop ’till you drop. People tend to overspend when using plastic; a study of consumer behavior confirmed that shoppers using credit cards spend nearly 20% more. There’s also interest to contend with. That $812 could turn into $1,000 or more thanks to compound interest. Even deferring payment for a month can be costly. Less than a third of Americans pay off their holiday credit card bills immediately. Most will carry a balance well into the new year.
✔Nice
If you’re traveling for the holidays, it’s practical to pay for it using credit. Most major credit cards offer insurance for rental cars and extra cancellation policies for flights in case of changes. Using a credit card to make reservations at hotels and other book-ahead services can also prevent the company from placing a hold on your account as a deposit. Keeping a clear budget will enable you to pay off that credit card bill next month and avoid charges.
✔Nice
If you use a rewards card throughout the year, now is the time to cash those points in. Most companies offer discounts on two commodities everyone needs this time of year: travel and gift cards. Picking up gift cards this way can make last-minute gift giving easier. You might even consider giving travel points or miles directly to others. This can be helpful for relatives who travel frequently or live far away from family.
❌Naughty
The holidays are full of messages that connect spending to caring. Advertisers encourage consumers to make emotional decisions, rather than spending what they can afford. Credit cards make this easier by letting you postpone paying for the gift. Instead of telling someone you care with borrowed money, express your feelings with a thoughtful message and an affordable gift.