5 credit card spending tips you need this holiday season

5 credit card spending tips you need this holiday season

It’s hard to get through the holiday season on cash alone. According to a new CreditCards.com survey, more than half of holiday shoppers say they’ll spend $50 or more on their most expensive gift this year. So whether you’re ordering Hot Wheels online to stuff stockings or renting a car to get to Thanksgiving dinner, it’s likely you’re going to need a credit card at some point. Of course, if you’re going to rely on plastic, you need to be smart about it. Here are five tips for doing credit cards right this year.

Understand that a credit card is a loan.

Forgetting this simple fact (and I still meet people who do) is one reason people get into trouble with plastic: Using a credit card means you’re borrowing money that you need to pay back. With interest if you don’t pay it all back at once. It is not, as I’ve heard it described to me, another “account” where you can access money, like savings or checking. Keep this in mind every time you use a credit card.

Pay your bill in full and on time each month.

Whether it’s taking a pricey winter vacation or gift giving, ’tis the season of overextending your finances. Don’t be tempted by so-called “installment” loans that charge hefty interest even if you pay them off on time. Credit cards, however, can be enjoyed without paying for the privilege—but you have to be extra careful. The secret is simple: Stay out of debt. The easiest way to do that is to never put anything on a card that you can’t pay back in full by the end of the month. Otherwise, interest will begin to pile up—quickly.

Make sure you’re coming out ahead with your rewards card.

Staying out of debt is crucial to making rewards cards, well, rewarding; paying interest to get points makes zero sense and outweighs any advantages the card might offer. Take it from these three rewards card junkies who have avoided trouble.

Learn from others’ mistakes.

There are so many ways to go wrong with credit cards. Whether it’s making only minimum payments (and continuing to pay interest) on a years-ago spending spree or a suffering from a basic misunderstanding of how fees and penalties work, these cautionary tales can show you the potential pitfalls and how to avoid them.

Don’t spend more than you need to.

There are two ways to do this. If you’re worried you won’t be able to pay off your balance in full, call your card company and ask them to reduce your rate. (Seriously. It works around 80% of the time.) That way if you do end up paying interest for a month or two before you pay off your bill completely, at least you’ll have a lower rate. Second, never pay retail in the first place. Take advantage of these great tools for holiday shoppers—students and parents alike—to hunt down discounts and promo codes, saving time and money.

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