Don’t fall victim to these mistakes this year.
- It pays to do your holiday shopping with credit cards to rack up cash back and rewards.
- Be sure to use and manage your credit cards carefully to avoid a host of negative consequences.
The holiday season will soon be upon us, and chances are you’ll be spending some extra money on gifts, travel, and decorations. It’s during this particular time of year that you can be at risk of falling victim to credit card errors, so be sure to avoid them at all costs.
1. Open too many store credit cards
Often when you shop in person and go to checkout, you’ll be asked if you want to apply for a store credit card. Usually the person asking will try to entice you with a discount on your current purchase.
You might be tempted to sign up for a store credit card not only to get a discount, but also to rack up rewards on future purchases. But be careful: store credit cards are notorious for charging high interest rates, so carrying a balance on one could be expensive.
Related: See The Ascent’s list of the best holiday credit cards.
2. Apply for too many credit cards at once
Adding a few new credit cards to your personal combination might seem like a good idea heading into the holidays. But applying for too many new cards at once could hurt your credit score, making it harder to borrow money or qualify for better credit card offers in the future.
Every time you apply for a new credit card, the issuer does a thorough check on your credit report. A single hard query won’t do much damage. But if you apply for three new credit cards within the same month, that will cause a bigger drop in your credit score.
Also, if you have short-term plans to apply for a larger loan, like a mortgage, those credit card applications can serve as a red flag. A mortgage lender may wonder why he needs to borrow so much all of a sudden and may deny him a loan.
3. Not keeping track of your weekly expenses
When you pay for purchases with cash, you can remember to pass handfuls of money to a series of store cashiers. But when you use your credit cards, it can be easy to forget exactly how much you’ve spent to date.
As a general rule, it’s a good idea to check your credit card balances every week. It’s an especially wise idea to do this during the holidays, when your spending is likely to increase. If you don’t do that check, you could end up with a string of balances higher than you can handle, and a pile of post-holiday debt.
4. Forgetting your existing credit card rewards
You may have credit card rewards that you can redeem that will offset the cost of some of your holiday shopping. Before you go out and spend your own money, take a look at the rewards you’ve racked up and see how you can put them to good use. This is especially important if some of your credit card rewards come with expiration dates.
It is common practice for consumers to shop with credit cards during the holidays. If you’re going to take a similar route, do your best to avoid these mistakes so you can end the year on a positive financial note.
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