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7 Reasons to Avoid Using Your Credit Card for Holiday Shopping

Why Holiday Credit Cards Are Dangerous


The holiday season is the biggest shopping season of the year. It's also the time when many Americans rack up thousands of dollars in credit card debt they can't afford to repay. If that's not enough to ditch your credit card during the holidays, here are more reasons you shouldn't use your credit card for holiday shopping.

1. You'll owe more money to credit card companies.

If you already have a balance on your credit cards, holiday shopping will only add to the debt. Some people use that as an excuse to spend more, but the consequences are more time to pay off your debt, more interest paid to credit card companies, and less money for you to spend on other things.

2. You'll end up spending more than if you paid with cash.

People who use credit cards spend more money than people who use cash. That's because you don't have a physical sign to tell you to stop spending, like the fact that you've run out of money. It's better to avoid credit cards completely and set aside some cash to do your holiday shopping.

3. You'll end up paying more for your purchases.

One of the benefits of using credit is that you can pay later. However, that benefit comes at a cost. Because you pay interest on balances you carry beyond one month, you'll end up paying more for your gifts than they actually cost. If you already had a balance on your credit card, you won't get a grace period. Instead, interest starts adding up immediately.

4. You'll have less money in the New Year.

Do you really want to spend the first few months in the New Year paying off holiday debt. By March, you'll be stuck with a credit card balance, but probably won't be able to remember how you got the balance in the first place. This Christmas, give yourself the gift of a debt-free New Year.

5. There's a higher risk of credit card fraud.

Credit card thieves take advantage of increased holiday shopping, using it as their opportunity to snatch credit cards and even credit card numbers. Leaving your credit card at home reduces the risk that someone will steal your credit cards while you're shopping.

6. Interest rates could increase on the balance.

In February 2010, new credit card rules will prevent credit card companies from raising rates on existing balances. But, banks still have almost 60 days once holiday shopping ends to jack your rates before the new rules go into effect. This unexpected increase in rates could leave you paying much more in finance charges than you expected.

7. You could spend more than you can afford to repay.

There's a lot going on during the holidays. When you use credit cards for holiday shopping, it can be difficult to keep a running tab of what you're purchasing. In the end, you could end up with credit card bill so large, you can't repay it. That's the situation you want to avoid most of all.

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