Credit card spending continues to spike over holiday season, and more consumers are still pulling out the plastic for both online and offline holiday purchases. Online shoppers typically use credit cards to complete their purchase, and comScore reports that consumers spent approximately $29.1 billion for online purchases over holiday season in 2009 alone!
The lure of zero-percent interest rates, cashback and rewards with credit card purchases might tempt you to purchase holiday gifts and decorations on credit, but you could end up paying hundreds of dollars in interest and high fees over the New Year. If you want to avoid the spending philosophy of “just charge it” this holiday season, use these five strategies to avoid using credit cards altogether:
1. Make a cash-only budget. Set a budget range for all of your holiday purchases this season, and divide it into categories – décor, family gifts, gifts for friends, food and miscellaneous items. Commit to paying for all of these expenses with cash, and withdraw the appropriate amount so that you know exactly where your money is going. Any money that you have left over after purchases are made can go right back into your savings account.
2. Don’t cash in on discounts that require you to pay with a store card. Many major retailers, including Kohl’s, Macy’s and some department stores will send out holiday specials and offers only to card holders. In many cases, you can’t get the discount unless you charge your purchases on the store’s credit card. Plan ahead and shop around for the best price for items you really want and need so you don’t hit the store for a credit-card funded shopping spree!
3. Avoid opening an account at the store’s register. Many retailers offer a deep discount to prospective cardholders for the total purchases over holiday season. Even though you could knock off 10 to 20 percent or more off your holiday purchases, you’ll have to charge it all to your new account. This can set you on a dangerous cycle of charging more than you planned for, and will take its toll on your credit score. Just say no and pay with cash as planned!
4. Don’t take any credit cards with you. You can’t charge your holiday purchases if you just don’t have the cards on hand. Leave your credit cards at home whenever you go out on your holiday shopping trip so that you don’t even have to think about how you’re going to pay.
5. Pay for your online purchases with electronic checks or debit cards. Online shopping can be the perfect reason to use a credit card, so you’ll need to take extra steps to avoid charging your purchases this holiday season. Make sure your shopping accounts aren’t already tied to a credit card, and pay for everything you buy online with an eCheck, PayPal funds, or a debit card.
