10 Shopping Tips to Minimize Holiday Debt

10 Shopping Tips to Minimize Holiday Debt

November 23, 2019         Written By John H. Oldshue

The holiday shopping rush is on and shoppers are in full swing. Paying with a credit card makes it is easy to be in the spirit of buying and giving without paying attention to how much money is being spent. But January credit card bills bring the cold reality of debt and interest payments. If you are not careful with your spending throughout the holiday, you could be paying for Christmas long after the gifts are forgotten.

Here are ten tips to make this an affordable holiday season:

1) Make a budget and a shopping list. Start with what you spent last year and then keep a record of all gift purchases and holiday expenses–from postage stamps to the food for the office party. It is hard for shoppers to make a budget and easy to underestimate their spending. The average holiday shopper spends over $1,000, according to the National Retail Federation.

2) Change your shopping habits now before you get into the spirit of the season. If you can not afford to pay off your credit card in November, then you can not afford to add a lot more to it in December. Generosity to friends or the perfect gift for the family are not good reasons to put yourself deeper into debt.  If you must use a credit card to pay for Christmas, make sure you can pay it off by Easter.

3) The best way to stick to your budget and avoid impulse spending is to pay in cash. Pulling cash out of your wallet or purse and handing it to someone else is painful, and a reminder that the less you spend, the more you can keep.

4) Before making your first holiday purchase, verify the credit limit on every credit card you use. If you are not aware your limit has been lowered, you can unknowingly exceed your credit limit. This can cause problems, including a lower credit score and a significantly higher APR.

5) If you are looking for a new credit card, this may be a good time to apply. There are a number of credit cards with a 0% introductory rate for purchases for a year or longer, allowing you to use your card as a free loan for holiday spending. This is recommended only if you pay it off before the interest charges begin. You should still stick to a budget even if you have a card with an intro rate, you do not want to be stuck with the interest if you can not pay the balance by the end of the intro period.

6) Pay attention to the price of the item after you purchase it. If the price drops during a specified time and you paid with a credit card, some issuers may reimburse the difference. You may have to register the purchase online as well as keep your store and credit card receipts as proof of purchase.

7) If you are going to carry a balance, contact your issuer and ask for a lower rate. They may not be willing to negotiate, but it doesn’t hurt to ask.

8) Avoid use of convenience checks that regularly appear in your mailbox this time of year. These promotional checks look like free money, with 0% offers in bold print. These offers may seem like a tempting way to pay for holiday shopping but read the terms and conditions to know exactly what you are getting. There is typically a 3% or 4% fee for using these checks and they can charge a higher interest rate.

9) Use your rewards points earned from your credit card for holiday shopping. These can be used to buy gift cards with many retailers, sometimes at a bargain rate. Some issuers have deals in place where you can purchase a $50 gift card for $45 in rewards points or cash back, or similar offers. If you already know you are going to be shopping at a specific store this could be a great way to maximize the cash back and points that you already have. You could even purchase a gift card as a gift for someone with your cash back, that way it does not take any cash out of your pocket.

10) Pay attention to partner programs. Most credit card issuers have a partner program that offers discounts or bonuses for online purchases with certain companies. The programs vary by issuer, but the partners could be stores where you already shop.

The main thing to remember when going into holiday shopping is to keep track of your spending and plan ahead. Keep a list over everyone that you would like to get a gift for and assign a dollar amount to them. As you purchase gifts for people on the list mark them as complete and do not spend any more money on them. As consumers during the holiday season, it is easy to get swept away in the spirit of giving and end up with a hefty bill to remind us of our generosity.

If you are looking to get a balance transfer card for the holiday season, LowCards.com is a good place to start looking. You can find card offers with %0 APRs on balance transfers on as long as 21 months with some cards. This can be a great option if you are not wanting to pay interest but know you are going to carry a balance on the card.

You can also find a cash back credit card that can help you earn rewards if you do not already have one. You will earn rewards on eligible purchases and then you can use those points to make purchases through the issuer’s partnerships or redeem it as a statement credit. If you do not have good enough credit to get a cash back rewards credit card, there are some prepaid cards that also earn cash back. With prepaid cards you will need to add the funds that you are going to use to the card first, then you can make purchases just like you would normally. Only a handful of them offer rewards so before you apply make sure that you are looking at one with cash back rewards.

If you follow these tips you should be able to avoid building up any significant debt over the holiday season.

The information contained within this article was accurate as of November 23, 2019. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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john-oldshue

About John H. Oldshue

John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.