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This post comes from Lindsay Meredith at our partner site Quizzle.com
The holiday shopping season will be in full swing before you know it, and, if you’re like many Americans, you’ll be making your special purchases with a credit card. After all, credit cards are a safe and convenient way to shop, plus they off special protections on the stuff you buy, like extended warranties and insurance.
What could go wrong?
Actually, a lot. Credit cards might be one of the most popular ways to shop, but for many people they represent an opportunity to get into serious financial trouble. It’s important to be careful with plastic, especially during the holidays, when many of us let our guards down and throw fiscal caution to the wind.
This year, be sure to keep your credit – and sanity – in check by avoiding these ten credit card pitfalls:
1. Piling On Debt
Not only will charging too much on your cards result in seriously expensive interest charges, it will also hurt your credit score. Thirty percent of your score is determined by how much debt you’re carrying, so make sure you control your spending this holiday season – or your spending will end up controlling you.
2. Forgetting About The Bills
The holiday season is often busy and rushed, but it’s important to remember to pay your credit card bills on time. This is because the largest portion of your credit score – 35% – is derived from your history with paying your bills on time. This means it’s critical to make paying your holiday bills on time a priority.
3. Falling For Credit Card Gimmicks
At this time of year, many credit card companies offer “teasers” to try to get new business. These gimmicks often take the form of interest-free periods or special rewards, are meant to capitalize on our propensity to overspend at this time of year. Don’t fall for it! The last thing you need is to end up stuck with an extra card to keep track of that you don’t want or need.
4. Making Minimum Payments
Making minimum payments on your credit cards in order to conserve cash for other holiday expenses might seem like a great idea, but it will end up costing you. Not only will you end up paying through the nose in interest, you’ll also probably end up building up debt that will be hard to shake. Never pay just minimums, not matter how tempting it might seem.
5. Opening Too Many New Cards
Opening a new store credit card might save you a bundle on your first purchase, but just be careful not to open too many retail cards. This will make it harder for you to keep track of your spending, and will also cause your credit score to drop, so be careful to keep your new credit inquiries to a minimum.
6. Maxing Out Your Cards
Maxing out a credit card is a sure-fire way to kill your credit score, and it’s also an easy way to end up with a big bill you can’t pay. Be sure to avoid exceeding 30% of your available credit, and pay off your balances as soon as you can.
7. Not Tracking Your Spending
One of the great things about shopping with credit cards is that it’s easy to track your spending online – however, a lot of people get into trouble because they neglect this simple step. Be sure to keep a close watch on how many purchases you’re putting on the card, and if your spending starts to get out of control, reel it in fast!
8. Giving Your Card To Someone Else To Use
It might seem convenient to give your credit card to a friend or family member and ask them to pick up a few things for you, but this move could get you into trouble. After all, it’s hard to know exactly what they’ll buy, and there’s always the possibility they could get out of control. No matter how busy you are, don’t send someone else out to do errands with your credit card – you could come to regret it.
9. Saving Your Card Info On Too Many Sites
Online shopping has made it really easy for us to pick up our favorite products without having to leave the house – in fact, it’s almost too easy. Avoid saving your credit card information on too many sites – you’re opening the door to overspending in the future.
10. Not Taking Advantage Of Credit Card Rewards
Many credit card companies offer special rewards on a rotating basis, and some of the most generous deals come at the holiday season. Be sure to check in with your credit card company to see what they’re offering, and shop accordingly – you could end up saving some serious cash!
Shopping for the holidays doesn’t have to be a drag on your finances if you avoid the ten credit card pitfalls described above – consider them an insurance policy on your holiday cheer!
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