There is no denying the fact that you will be faced with some additional spending during the holiday season. This is particularly true if you have a long list of people to purchase gifts for.
Some people use a “cash system” to guide themselves through the holidays. Others, however, rely on a credit card. While there is nothing wrong with this, you can soon find yourself in financial trouble if you go down the wrong path.
Here are three ways a credit card can get you in trouble during the holidays:
1. Not tracking your spending. It is easy to pull out your plastic, make a purchase, and go onto the next store. The hard part comes when your statement arrives in the mail.
If you don’t track your spending, it is possible that you could break your budget without knowing it. Subsequently, when the bill comes due, you could be in for a big surprise.
2. Unable to pay your balance in full. If you have the goal of paying your balance in full after the holidays, such as in January, make sure you know exactly what you are up against. This goes along with point #1 above. You have to track every purchase, as this is the only way to know if you are staying within your budget to the point of being able to pay in full.
3. Opening a new account. For example, you may be tempted to open a store credit card to save 15 percent (or whatever it may be) on your first purchase. Again, this may be a good idea if you have the money to pay the bill in full. If you don’t, it could be a decision you regret once the new year arrives.
Note: store credit cards are notorious for having a high interest rate.
You don’t want to stress over money during the holiday season. For this reason, make sure you avoid the three credit card mistakes detailed above.