The holiday season is here and for most of us, that means spending! Between gift giving, decorations, and holiday travel, there’s a lot to finance and you may be tempted to just put it all on your credit card so you can deal with it later. However, the temporary relief of taking the bill off your mind might cause a lot more trouble down the road if you’re not careful using your credit card this season! Let’s look at some “naughty” and “nice” ways to use your credit cards during the holidays. Stay on the right list to avoid blotches on your credit report.
It’s tempting to pull out the plastic to pay for all those gifts, but it’s also irresponsible if you can’t pay for it right away. If you’ve properly budgeted and stuck to your budget, then maybe you want to put the gifts on your card to get rewards points and you can pay it off immediately. That’s no problem at all, but if you’re overspending and using your credit card to do it, then you might be heading for trouble. If your credit card spending is going to leave an outstanding balance on your next bill, you’ll wind up paying much more in interest and you’ll likely carry the balance well into the new year.
Funding your holiday travel costs with credit can give you extra peace of mind. Most major credit cards offer insurance for rental cars and cancellation policies for flights, so you have some backup in case of any holiday travel problems. If you’re travelling for the holidays, you likely are planning in advance, too. That means that financing your holiday travel with a credit card won’t be another major purchase added onto your card in the last month of the year, so you’ll be more likely to pay it off in full before any other holiday expenses get added to the bill.
Instead of telling someone you care with a pricey gift you can’t afford, express your feelings with a thoughtful message and an inexpensive gift. Often, less expensive gifts that show genuine consideration for the recipient are more warmly received than the latest expensive piece of tech that anyone could go out and buy. You can also consider a homemade gift – they’re less expensive and show even more thought and care! As the saying goes, “it’s the thought that counts”!
If you’ve been saving up your rewards points all year, now is the time to cash them in! Many people save up their rewards points, sometimes with a major purchase in mind, but if you’ve just been saving them for a rainy day, the holidays are a great time to put them to use. Checking items off your gift list without spending any of your money or charging your card is like a little gift to yourself. Even being able to use points to fund just one or two gifts is a big net positive to your holiday budget!