If you are one of those people who just finished paying off your credit card charges from last year’s holiday shopping, then you know first-hand how hard it can be to free yourself from undisciplined spending. The danger with the credit card is that it is so easy to use. And the temptations are overpowering. The malls are filled with special ads for credit card users, especially store credit cards. It is easy to lose track of how much you have spent. No cash in the pocket? No problem, just whip out the plastic. Some stores have even done away with the need to sign the receipt.
Even if you have the best intentions and make a mental promise to pay off the bill in full when it arrives, or at least to make more than the minimum so you can pay it off as quickly as possible, circumstances have a tendency to jump in the way and derail you. At the end of the holidays, you could find yourself with more credit card debt than you can handle, completely wiping out all the joy you accumulated.
Here are 5 strategic ways to avoid holiday credit card debt:
- Interest free or deferred interest. Stores will offer you interest free or deferred interest on all your purchases if your use their store credit card. Don’t fall for this trap. It is extremely seductive but can be very dangerous. You might not see any reason why you will not be able to pay the bill in full, when the deferred period ends. However, if for some reason you are unable to pay off the bill, you will be charged the full interest for the entire time, something that can sink you into a debt black hole.
- Free spending. With a credit card, it is very easy to lose track of your spending. If you use cash, you know in advance how much you have, and when you see it is gone, you know how much you have spent. A credit card is kind of like invisible spending. Keep a running list of your credit card charges. Better yet, download one of those free apps that track your charges for you. Check in throughout the day so that you know what your next credit card statement is going to look like. Be sure you can handle it before you continue shopping.
- Protect your card from theft. Today, the credit card thief does not have to actually take your card from you. They use sophisticated methods, such as smartphone technology and phony text messages to access your credit card data. Keep your credit card close to you at all times, and be aware of your surroundings.
- Run away from all credit card marketers. This time of the year, every store will be teeming with credit card marketers searching out new customers for bank or in-store credit cards. They will corner you and try to convince you of how much money you will save at check-out by applying for a card. Don’t fall for it. Head in the other direction when you see them coming!
- Resist the allure of rewards. Reward credit cards are great, but be careful not to let that be such an incentive that you spend more than you can afford. Remember, in spite of the rewards, you still have to pay the charges. If you can afford to pay off your credit card every month, then the rewards are definitely a reason to charge your purchases rather than paying in cash. Otherwise, forget about the rewards and charge responsibly.