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10 Holiday Credit Card Mistakes

How Not to Use Your Credit Card During the Holidays

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‘Tis the season when normal credit card rules and safe spending habits are forgotten. Instead, the holiday season is often an excuse to splurge, charging up credit card balances that take an entire year to repay, if not more. That’s not the only mistake people make with their credit cards during the holidays. Here is a list of 10 common holiday credit card mistakes.

1. Maxing out your credit card on gifts.

If you max out your credit card during holiday shopping, you risk going over your credit limit once finance charges kick it. Plus there's a negative impact to your credit score whenever your balance exceeds around 10% to 30% of your credit limit. You face an over-the-limit fee and you could trigger the default interest rate if you go over your credit limit while you're holiday shopping.

2. Buying more gifts than you can afford.

Racking up more debt than you can repay will lead to trouble in the New Year as you struggle to figure out how to pay for those charges. Save yourself some future stress by only purchasing what you can repay in full when your bill comes.

3. Gift shopping without a budget.

Without a predetermined spending limit, you can easily max out your credit card or charge more than you can afford. Before you hit the mall, figure out how much you can reasonably spend and keep that amount in mind as you shop.

4. Spending without tracking your balance.

A budget does no good if you don't make sure you're keeping up with it. Keep track of your receipts and periodically check to make sure you're not spending too much. You may even be able to call your card's automated line to double check your balance.

5. Opening or applying for new accounts just for the discount.

Retail stores will encourage you to sign up for their store credit cards and even offer a discount on your purchase. Resist the temptation to apply for new accounts just to purchase more gifts. The inquiries affect your credit score and you risk charging more than you can afford.

6. Letting someone holiday shop with your credit card.

If you loan your credit card to someone else, you have no control over how much they’re spending on gifts. Be prepared to repay the balance of those gifts if your card borrower doesn’t pay up.

7. Leaving your card unattended while you shop, eat, etc.

There is a lot going on during the holiday season. Your credit card is targeted more during this time of year than any other time. Keep your credit card close to you and never let it out of your sight. Granted, you have limited (sometimes $0) liability for charges on a stolen credit card, but dealing with a stolen credit card can dampen your holiday spirit. Put credit card safety first.

8. Using your credit card to buy gifts because you don't have cash.

If you don’t have cash to buy gifts this holiday season, chances are you can’t really afford the gifts anyway. If you don’t have money for gifts, don’t resort to credit. Instead, consider regifting items you’ve receive, find deals at a thrift store or yard sale, or give homemade gifts. (Not giving a gift at all is also an option.)

9. Charging gifts for yourself because you "deserve" them.

It can be hard perusing the stores for weeks without getting anything for yourself. While you’re going to see things you want to buy, but practice self-discipline. Remember that while you’re out getting gifts for others, there are people buying gifts for you.

10. Ignoring your post-holiday billing statement.

If you kept track of how much you spent, you can already guess that your first credit card billing statement will be higher than normal. Facing it sooner rather than later will help you get rid of that high balance sooner rather than later. Another reason to check your billing statement: to catch any fraudulent holiday charges made by rogue elves.

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