One of the best things you can do for your finances is remember the cost of credit cards. It’s important to understand that some credit cards cost quite a lot — especially if you carry a balance.
And the holiday season represents a time when many consumers let credit cards overtake their good sense. Once you start racking up the debt, it’s hard to stop, even though you know you need to.
While credit cards can be great tools to help you save money during the holidays, from transferring a balance to getting cash back rewards, it’s also important to be careful.
Justifying Your Credit Card Use
One of the issues is that it’s so easy to justify credit card use during the holiday season. Some of the more common justifications include:
- But it’s for someone else: Sometimes it’s easier to justify going overboard when you are making purchases for someone else. You get a little carried away, and forget about your frugal holiday plan as you buy more toys, or more expensive items. Don’t use this as a justification. True friends understand that you are doing your best.
- Get caught up in the spirit: It’s easy to get caught up in the spirit of things during the holiday season. As a result, you soon spend more than you expected, and the bills add up. Instead, make a list of what you want to spend, from gifts to decor, and stick with it.
While credit card use during the holidays can be to your advantage, you have to be careful about it. You can’t get too carried away with your spending, or you will find yourself overwhelmed with debt, and unable to pay off your credit card as needed.
Pay Off Your Balance
The whole point of taking advantage of credit cards during the holiday season is to earn some cash back, or get some other advantage. You won’t see that advantage if you carry a balance. The high interest rate charged by credit cards negates your efforts to take advantage of rewards programs.
One of the hardest things to do during the holiday season is to pay off your credit card balance in full as you receive your statement. However, it’s important to make this step, otherwise you end up getting into debt over the holiday season. And that kind of defeats the purpose of being responsible during the holidays.
Plus, it can be a real let down at the end of the holidays to look at your credit card bill. You need to be realistic about the situation, and remember that the money you have available on your credit card isn’t actually your money. You are borrowing it from the credit card issuer. If you carry a balance, you pay a heft interest rate, and you put your finances behind.
Be careful about the way you use your credit card this holiday season. Have a plan for your spending, and stick to it. You’ll be in a better financial situation, and you can get through the holiday season with better rewards — and no debt.