Ducking Holiday Credit Debt

(facebook banking promotion directed at college kids)
by Marni Andrews

1. Be the Good Statistic

One in three people rely on credit cards for holiday shopping. Consciously make up your mind not to be a credit fatality if you use your card this season. If in doubt about buying something, use the “two-day plan.” If you see something you want, put it on hold for two days and consider whether you still want it.

2. Get With a Plan

Researchers point out that shoppers are much less likely to overspend if they start with an overall plan for holiday shopping. This might include setting up an account ahead of time that’s just for gifts. Save $20 a month and you have a good windfall at the end of the year.

3. May the Best Card Win

If you’re like many people, you have more than one credit card. Before you start spending for the holidays, review the different interest rates, any offers for interest-free months following the holidays, and the due dates for the cards. Then choose the card that best suits your situation.

4. Spread Out the Pain

If you start shopping earlier, say in October, you’ll be able to break up your holiday purchases over three credit billing cycles if you plan carefully. Just be sure you know when the billing cycle starts and ends. If you buy early in the billing period, you’ll be able to delay payment for almost two months if you’re sharp with the dates.

5. Go for Solvent

Instead of going for broke, decide you’ll pay off your entire credit balance each month rather than paying interest. Not only will you be more discriminating about what you purchase (knowing you’ll have to pay for it in a month), but you’ll save an incredible amount of money in interest over the long term.

6. Use the Free Gifts

Most credit cards offer some form of loyalty points. Along with those points comes a catalogue showing what you can “buy” by redeeming points. Electronics, decor and home-related items are typical. You should be able to buy a gift or three by tallying up your points and choosing goods from the catalogue. Make sure to order early enough to ensure holiday delivery.

7. SOS (Save on Shipping)

If you’re even reasonably organized, you’ll be able to avoid any last minute (aka “Dec. 20th and later” or “day before”) shipping charges, which can really up your balance for the month.

8. Note Your Due Date

Since missing a credit card payment is not only expensive because you end up paying more in the long run, it also does incredibly bad things to your credit. Even if you can’t pay off your entire balance, paying at least the minimum (or as much as you can throw at it) and submitting it on time will keep your credit record in the clear. Note the due date on a large calendar and send in your payment so it arrives on time.

9. Take Advantage of Online Payment

If you set up an account ahead of time, paying your card balance online can be a painless way to pay on time, save the postage and never have to leave the comfort of your dorm room. Note the due date on a calendar so you don’t miss it.

10. Consider a Short-Term Loan

If, despite your best intentions, you find yourself with too much credit card debt from the holidays, contact the bank that issued the card to ask about a few months of interest-free grace. If that doesn’t work, take out a short-term loan at a lower interest rate than that on the card. Pay off the card balance, and then throw everything you can at the loan till it’s paid off.

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