Smart Ways to Use Your Credit Card for Holiday Shopping and More
The holiday season is drawing near, and people across the country are preparing for one of the most merciless and fierce American traditions: holiday gift shopping. As limited-time deals fly by, shopping lists grow, and rewards are collected, it’s more important than ever to make sure that you’re using your credit card as effectively as possible.
Take some of the stress out of the holidays by using your credit card wisely. Find out all the best credit card tips for your seasonal shopping.
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Why You Should Use Your Credit Card for Holiday Shopping
The holidays can actually be a great time to use your credit card for these reasons:
- You can avoid some crowds. Banks and ATMs will be packed at the height of holiday shopping. The best thing that you can do for yourself and for other shoppers it to streamline your process by paying with a credit card. This way you can glide through the register with the gifts you’ve bought and manage your account online from the comfort of your own home. This will be especially nice as winter weather starts to roll into many areas.
- You can build credit. One of the best ways to consistently build credit is to use your credit card often, and pay your credit card bill each month. If you’re someone who struggles to find ways to utilize your credit card, taking it out for a day of holiday shopping can be just what you need.
- You can organize your gift-buying. Many people with a large extended family or many friends will find that they have a lot of gifts to buy this holiday season. By purchasing gifts with your credit card, you can compare your credit card statement to your shopping list and make sure that nobody has been left out this year.
These are some of the biggest benefits of using your credit card for holiday shopping. However, if you don’t use the right strategies, a time of cheer can quickly turn into a time of credit card nightmares.
Keep the Right Credit Card Balance
It’s always important to keep the best credit card balance that you can — spend wisely and within your means so that you can pay your balance in full at the end of each billing cycle. Doing so will help you to avoid credit card mistakes like late fees, charge-offs, and credit card debt. However, it’s more difficult than ever to keep up good usage habits during the holidays, when many people do the most shopping of the entire year. Try following these tips to keep the right balance on your credit card throughout your holiday shopping:
- Plan your budget beforehand. Don’t wait until after you’ve bought everything to tally up your holiday spending. Make to budget for Christmas shopping beforehand and stick to it. When you make your budget, hope for great sales, but plan on standard pricing.
- Don’t get carried away on big spending days. Certain days of the holiday shopping cycle see more spending than others. Special events like Black Friday can land you in a heap of credit card debt if you’re not careful with your spending.
- Spread your holiday shopping out over a few months. If you’re an especially enthusiastic gift shopper, you may find yourself hitting your credit limit and getting charged an over-limit fee when you try to do all of your shopping in a short period of time. To avoid this problem, spread your shopping out so that you can do some in the October or November billing cycle and then the rest in December. This will also spread your holiday spending out over multiple paychecks, rather than putting all of the stress on one pay cycle.
Use a Balance Transfer During the Holidays
If you find that your credit card balance is getting especially out of control, it might be a good idea to do a balance transfer, moving the outstanding balance from one card to another. This is a good idea if your holiday spending has gone beyond what you can pay in a single billing cycle, but you don’t want to collect too much interest or be hit with late fees. If you do decide to use a balance transfer, try to do these things:
- Transfer from a high interest card to a low interest card. One of the best things about balance transfers is that they allow you to avoid incurring interest on your balance for a particular credit card. However, this benefit will be rendered pointless if you avoid paying interest on one card only to pay that exact same interest on another. Instead, always transfer your balance to the lowest interest credit card available. This way you’re accumulating less interest overall.
- Account for balance transfer fees. Doing a balance transfer can be a good way to get out of paying extra fees. If you end up paying more in balance transfer fees than you would in interest, then the balance transfer isn’t worth it. Make sure to crunch the numbers before you actually perform a transfer.
Take Advantage of Price Protection Services
Some credit cards will include price protection or price guarantee services. These services can be a godsend during the holidays, when prices can fluctuate like crazy. Basically, price protection is what it sounds like: if you buy an item and the price on that item drops within a certain timeframe (usually 60 to 180 after the purchase), your credit card company will only charge you for the lower price.
If your credit card has price protection, read the fine print before expecting a refund. You should also keep track of receipts and provide hard proof of a price drop when you make your claim. Used well, price protection is the perfect way to avoid crowds by doing your shopping early, while still reaping the benefits of later sales.
Survive Holiday Shopping With Your Credit Card
Using your credit card to take care of your holiday shopping will help alleviate a lot of stress. Make sure that you’re watching your balance and gift budget closely during your shopping and make use of services like balance transfer or price protection if you need to. For those who are new to holiday shopping with a credit card, remember to keep your credit card statement tucked away so that you can keep Christmas gifts a secret.
Want more tips and guides for using your credit card? Visit our credit card resource center for more information.
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Nick Cesare is a writer from Boise, ID. In his free time he enjoys rock climbing and making avocado toast.