Holiday Credit Card Shopping

Checking over that holiday gift list? There's another important list you need to review before you fire up your shopping cart. It's a list of Do's and Don'ts for using your credit card and ensuring you give yourself a great gift in the New Year – financial freedom.

Let's take a look:


DO: Make a spending plan
Review your holiday gift list and set a realistic budget based on your income and expenses. Ask yourself, "How much can I afford to spend?" and "How will I pay it back?"

DON'T: Go over budget
Spending more than you want is easy to do when you're shopping with a credit card. In fact, according to a survey by Dun & Bradstreet, people spend between 12 -18% more when using credit cards instead of cash. Be mindful of that when shopping with your credit card and stick to your list and budget.

DO: Try to pay off your credit card balances in full
Credit card interest rates are soaring, which makes carrying a balance very expensive. If you can, pay off your balance in full. If not, work on paying down as much of the principal as you can, since paying the minimum payment will only prolong the debt you owe.

If something happens and you can't pay off the debt, consider taking advantage of a balance transfer offer on credit card balances.

DON'T: Miss a payment or pay late
What's worse than a high interest rate? One that climbs even higher because you had a late or missed payment. To prevent that from happening, set up automatic payments to your credit cards and use bill payment reminders.

DO: Use a credit card with rewards
There are so many credit card options available today, including many that offer cash back and other rewards, such as discounts on gas. Make sure you understand the rewards offered with your credit card and capitalize on them.

DON'T: Open multiple department store cards
It's tempting when a cashier tells you that you can save a significant amount of money by opening a store credit card. But opening that card could end up costing you more in the long run, since these cards often come with lower credit limits, which can boost your credit utilization ratio and lower your credit score.

DO: Give yourself the gift of financial freedom
Being smart with your credit card this holiday season is a great step on the path to financial wellness – one of the most valuable gifts you can give yourself.