As we approach the hustle and bustle of the season of giving, make sure to plan ahead, especially if you're paying for the majority of gifts with a credit card.
Credit cards are a powerful tool; they are often more convenient than cash or checks, plus some cards offer points or cash-back on purchases. However, shopping with credit cards also comes with some risks to be aware of.
If you're paying with plastic this holiday season, take a minute to brush up on safe, responsible credit card use.
To help make life a little easier, we've gathered some “dos and don'ts" for smart credit card holiday shopping.
DO jot down a budget
To understand how much you'll need to cover your holiday expenses, make a list of every gift you have to buy and how much you plan to spend. To make this a little easier, use your spending from last holiday season as a benchmark when building this year's budget.
If you find the amount you plan to spend on the holidays is more than you can pay off in one, or possibly two months, try your best to cut back on some purchases. For instance, get creative and make a few gifts yourself instead of purchasing brand new ones. Or, plan a gift exchange rather than buying a present for every single friend or family member. If you carry a credit card balance month over month, the interest fees will add up and may impact your financial goals.
DO shop early
Once you have your holiday budget in place, feel free to start your holiday shopping early. The earlier you start, the more time you'll have to pay off smaller credit card balances instead of having one big balance come January. Shopping early also gives you time to collect coupons, stock up on retailer affinity points and take advantage of pre-holiday or early-bird pricing.
DO pick one card
To make sure you're not building up balances you can't pay off all at once, stick with one credit card for the holidays. You might choose the one that gives you the most cash back or one that has a low, fixed rate. Having just one card makes it much easier to track your spending and stay on budget.
Another advantage of using one card is that you can more readily keep a close eye on your charges and immediately report any signs of credit card
fraud to your card company.
DON'T stock up on reward points at the expense of your budget
Rewards credit cards that offer air travel miles, points for purchases or cash back are attractive. But, these cards can also tempt people to overspend just to build up the rewards. Carrying balances on rewards cards month-to-month can quickly add up as these cards typically come with higher interest rates.
A better idea is to only use your rewards card to the limit you can pay it off in a month. Rely on a low-rate credit card for everything else.
DON'T go 'shopping' for retailer cards
With the extra discounts and perks retail stores offer during the holiday season to open their private-label cards, it takes a disciplined shopper to resist. It's enticing to see those immediate savings on your purchases. Keep in mind, however, having more credit cards in your wallet means more statements to keep track of and more bills to pay.
When you're asked to register for a store credit card while shopping this holiday season, think twice before saying “yes".
DON'T shop on unfamiliar websites
Online shopping makes buying gifts for the holidays simple and easy. But, it can also put you at risk for credit card or identity theft if you're not careful. Only shop from trusted, reputable retailers and verify the website is secure before entering your credit card information.
Here's what to look for when shopping online:
- Make sure the website URL starts with “https" and not “http". The “s" stands for secure.
- Look for a lock symbol in the address bar. This means that the website you're using has the highest level of validation.
- Read online reviews before making a purchasing decision.
If you have any doubts when shopping online, don't give out your credit card information. Scams are rampant during the holiday season, so be sure to check your credit card activity frequently for any unusual charges.
Make holiday shopping and saving a little easier
When paying with a credit card this holiday shopping season, remember to stick to purchases within your budget and pay off your balance in full each month. With a good plan and a little discipline, you can use your card safely and responsibly this holiday season!
Save Better and Borrow Smarter during the holidays with help from Wright-Patt Credit Union (WPCU). We're here to help you make educated financial decisions with tips, tools and resources available in our online Education Center.