The holidays put enormous pressure on you, especially if you’re working on raising your credit score. It can feel like the month’s celebrations are designed to interfere with your goal.
But it isn’t so—you can manage your credit without calling off the festivities altogether. Here are five tips to help you protect your finances while still enjoying the holidays.
1. Stick to a Budget
When you make a budget, you have to get intimate with your cash flow. It forces you to understand how much you have to spend before you would have to dip into credit. And that’s something you want to avoid as much as possible this season unless it’s an emergency.
Once you have a spending cap, you might not be able to do everything or see everyone this holiday. You may even have to get creative with the gifts you buy or the events you attend.
A budget helps you narrow in on your priorities so you can concentrate on what really matters this season.
2. Don’t Be Tempted to Pay the Minimum
Avoiding a credit card isn’t impossible over the holidays, but it is pretty hard. You might pull out plastic because it:
- Saves you an annoying trip to the bank to take out cash.
- Protects your security better than a debit card when you shop online.
- Comes with numerous warranties and consumer protections.
- May be the only way to purchase flights or reserve hotels and rental cars.
- Offers rebates and other rewards with purchases.
Despite these many perks, a credit card can be a gateway for overspending. It’s easy to swipe your card without thinking about the consequences. You can pay the minimum to handle these costs and keep your account in good standing.
The problem is the minimum payment is for emergencies only, like when you need to put an urgent vet bill on your credit card or line of credit despite the cost. That’s because paying the minimum carries over a balance that increases your utilization ratio, which is a major factor in your credit score.
Carrying too much debt on a credit card may lower your score. Your balance will also earn interest and finance charges when you carry it over to another month.
The online loan experts at MoneyKey recommend budgeting to pay off your full balance whenever possible when you use a line of credit. And this advice applies to your credit card, too.
Treat your credit card like its cash to avoid paying extra for the festivities. Only charge something when you know you can afford to pay it off all at once.
3. Avoid Putting Your Shopping List on Other Loans
While the plastic in your wallet may be a typical shopping buddy, not all personal loans are built the same.
For one thing, a line of credit or online installment loan is for emergencies only, like when your furnace stops working, and you don’t have enough savings to cover a service call on a federal holiday.
For another, opening a new account may have a minor impact on your credit score. That’s because some lenders run a hard credit check to determine your creditworthiness. This hard check may temporarily lower your score.
While this may be a small hiccup that only lasts a few months, it can ding you if you already have bad credit or are applying for other loans simultaneously.
4. Check Your Banking Statements and Credit Score
It’s a busy time of year for your credit card and bank account. With so many payments going in and out of these accounts, it’s a good idea to check them regularly to ensure everything is on the up and up.
When reviewing your credit report and bank statements, double-check all your expenses match the number on your bill. You should also keep your eyes peeled for any unusual activity you can’t explain.
If you see a charge or withdrawal you don’t recognize, lock your account and get in touch with the retailer, your bank, and credit card company. They’ll help you protect your finances from fraud.
5. Don’t Fall for Holiday Scams
While you’re focused on making merry the traditional way, fraudsters have a different plan in mind. Scammers try to steal your information this holiday to max out your credit cards and open fraudulent cash advances.
According to the FBI, one of the biggest holiday scams for consumers is the non-delivery trick. In this scam, you buy an item online and the retailer never sends your parcel. The retailer you thought you were buying from is a front; they never had the item you purchased nor had any intention to send it to you.
Knowing the signs of a fake store online can help you avoid non-delivery scams.
- Check reviews for the brand
- Go to the site’s social media pages
- Check for a padlock in the address bar
- Look for a trust seal
- Copy and paste the URL into Google’s Transparency Report
- Ensure they have contact information and return policy
- Run an anti-virus program for all your browsing
You Can Protect Your Credit This Season
Protecting your credit is possible this holiday, and it doesn’t have to involve elaborate steps. All it takes is a commitment to the small steps outlined today, like following your budget and checking your report. These little things contribute to financial security all season long.