Consumers Plan to Use Credit Cards for Holiday Shopping
Americans have seen a number of substantial data breaches since last year’s holiday season, but that has not had a major effect on how they plan to pay for their items this Christmas.
A new survey from TransUnion shows 80% of shoppers plan to spend money on their credit cards over the holidays, and 60% have little or no concern about how this spending will influence their credit.
Similar to 2013, 82% of shoppers plan to spend more money this year compared to a year ago. While the majority of these consumers have no concerns about their future credit risks, many are concerned about the dent this holiday season will put in their finances. 84% of survey respondents said they were concerned about the affordability of their gifts, and 48% said they would be relying on credit cards to complete their shopping lists.
It seems some shoppers are planning to use credit cards as a crutch for holiday shopping sprees this year. 59% reported they do not have a budget set for their holiday gifts. 35% still have not begun saving for the holidays, and 52% of that group said they would be putting most of their purchases on their credit cards.
Here are ten tips to make this an affordable holiday season:
- 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.
- Change your shopping habits now before you get into the spirit of the season. If you can’t afford to pay off your credit card in November, then you can’t afford to add more to it in December.
- The best way to stick to your budget and avoid impulse spending is to pay in cash. People who pay in cash spend less than those that pay with plastic. Paying cash is a painful reminder of how much things actually cost.
- Verify the credit limit and your balance on every credit card you use. Charging to your limit can trigger a lower credit score and a higher APR.
- If you are looking for a new credit card, this may be a good time to apply. If the card has a 0% introductory rate for purchases for a year or longer, you can use your card as a free loan for holiday spending. This is recommended only if you pay it off before the interest charges begin.
- 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. MasterCard’s Price Protection offers this for a period of 60 days. You may have to register the purchase online as well as keep your store and credit card receipts as proof of purchase.
- If you are going to carry a balance, contact your issuer and ask for a lower rate. There is no guarantee that it will be lowered, but it never hurts to ask.
- Avoid using the convenience checks that regularly appear in your mailbox this time of year. 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 than your credit card.
- Use your rewards points for holiday shopping. These can be used to buy gift cards with many retailers.
- Pay attention to partner programs. Many 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.