As we’ve already touched on earlier this month in our blog, the holidays can be a dangerous time for your budget. In order to fulfill all your expenses – groceries, rent/mortgage, utilities, gifts, etc. – you may need to fall back on using your credit card. This can be both a good and bad thing.
Credit cards are great financial tools that provide you with some flexibility when used correctly. When used incorrectly, however, they can lead to mountains of debt that will take you months to recover from and that will kill your credit score.
Let’s take a look at a few ways you can use your credit card responsibly this holiday season:
Plan your spending- this means you need to know what you have in your budget for spending. Plan out what you will use cash or your debit card for so you can have a better idea of how much you will be putting on your credit card before you use it.
Use only one card- here’s why: if you’re maxing out your card, you’re using it too much. Also, it can be hard to juggle exactly what you owe on multiple cards.
Don’t fall for the bait- credit card companies like to make special offers at this time of year, such as skipping a payment or two. Don’t go for it; you’ll just end up paying more for it in the long run. Also, just say no when the cashier at the register asks, “Would you like to sign up for our rewards card and save 20 percent on today’s purchase?”
Ask “Do I really need this?”- if you’re purchasing something over $20, you need to ask yourself this question. If you don’t have the cash on hand to make the purchase, putting it on your credit card may not be the best idea either.
Remember: your credit card is your backup, not your primary source of purchasing power. Using it responsibly allows you to get what you need without crippling you with a load of debt that will take forever to pay off. This bodes well for your sanity and your credit score. If you don’t have a credit card, but are interested in using one for the holidays, grab an application from our website, print it and fill it out, and then stop by any Raccoon Valley Bank location to get started.
We look forward to seeing you soon!