Now that we’re in the thick of the holiday shopping season, many young credit card holders may be getting into the spirit of paying with plastic a bit too much.
That could lead to a cruel surprise in January when the credit card bill comes due, complete with hefty interest payments if not paid in full.
If you’re counting on Santa and his helpers to bail you out with cash, you may want to rethink that plan.
Better to have a plan that minimizes your impulse buying and maximizes your budgeting skills.
Before you charge another purchase, keep the following tips in mind from credit card experts:
• Review the credit limit on your card. Exceeding the limit can lead to higher interest rate charges and hurt your credit history.
• If you couldn’t pay off your November credit card bill, then you’re already in a hole in December. Don’t go deeper into debt.
“If you must use a credit card to pay for Christmas, make sure you can pay it off by Easter,” said Bill Hardekopf, publisher of LowCards.com.
The best strategy, which requires discipline, is to pay off your entire balance each month.
• Stick to a shopping list and a budget. Keep track of your receipts so you’ll have a running tab on your spending. If money is tight, do you really need to buy gifts for every friend, relative and co-worker? There’s nothing wrong about being generous, but look for other ways to show your holiday spirit. Besides, do people on your gift list really need more stuff?
• Heed the 24-hour rule. If a gift idea seems like a reach with your budget, walk away and sleep on it for a day. Don’t be pressured by a salesman to buy now while supplies last — or to buy two or three because it’s such a good deal.
• Pay with cold hard cash, or your debit card. When the money is gone, your shopping is done. Enjoy the moment.
• Take advantage of credit card rewards programs. My Visa card issuer, for example, offers 50 percent more bonus points for every dollar spent by Jan. 31. You might as well get something out of your spending.
• Check out partner programs. Credit card companies typically have programs where you can earn discounts or gift cards for online purchases with retail partners.
• Consider price matching services, but read the fine print.
Perhaps you’ve seen the ads for Citi’s Price Rewind. Register your purchases online that you paid with on your Citi card either online or in the store and the service will hunt for a better price for up to 30 days.
If a better deal is found that is at least $25 less, Citi will reimburse you the difference up to $250 per item. If you find a better price on your own that meets Citi’s criteria, submit a claim for the difference. Keep your receipts for proof of purchase.