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Tis the Season to be Jolly – and Financially Wise

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.”

- Will Rogers
Stage and motion picture actor, vaudeville performer, American cowboy, humorist, newspaper columnist, and social commentator

Does that quote hit home? Uttered more than 80 years ago, it certainly hasn’t lost any of its relevance – especially at this time of year.

Black Friday is here once again, and the holiday shopping season beckons. For some, the siren call of credit cards is simply just too hard to resist. But being a wise user of credit is within reach for everyone, provided a dose of discipline is applied before swiping. Adhere to the following rules of thumb to maximize your credit responsibility this holiday season:

Create a budget … and stick to it

Santa has the right idea when he makes his list and checks it twice. Take a tip from Kris Kringle, and make a gift list, and also include set amounts you can afford to spend on each person. Be pragmatic. Know what you can comfortably spend per person, and don’t go over it. Keep your list with you at all times so you don’t accidentally purchase a “new” gift for someone because you couldn’t remember what it was you intended to buy in the first place.

Cash is king

There’s no law that says you have to use credit. Paying for your gift list with cash is a great way to keep on budget. It’s a lot harder to justify overages when you’ve only got a set amount on hand. And don’t forget any of those rewards dollars you may have been earning on your credit card over the course of the year. You can factor those in as cash toward your purchases, too.

When one is enough

You might also consider limiting your credit purchases to one card. It is easier to lose track of what you’ve spent when you’re charging to multiple cards. Plus, you want to make sure you only charge what you can pay back when the bill comes due the next month. Revolving credit on cards usually means extremely high interest rates, which can compound quickly and turn your dream gifts into nightmares.

Avoid opening new store credit cards

Those offers you get for 10 percent off your purchase if you open a new store credit card can be tempting, especially when your arms are laden with items. However, many experts caution against doing so. Each time you sign up for one, an inquiry goes on your credit report, and too many inquiries can lower your credit score. Coupled with high credit usage, points can be subtracted from your score. Retail cards also tend to carry higher interest rates.

If you haven’t earned it, don’t spend it

Just like good ol’ Will Rogers said, if you haven’t got the money in your pocket, don’t spend it. In fact, we’ll even do him one better — you shouldn’t even spend every last cent in your pocket. That’s what the budget you created is for. It will keep you on track and help you stay within your means. If you are spending so much that it takes you into next year to pay it off, you’ve spent too much.

Lastly, always keep an eye on your belongings when shopping. Purse and wallet snatchings rise during the holiday season. Be just as mindful online when using credit. Only shop on sites that offer secure payment methods and have good rankings. And never give your credit card information to anyone over the phone if called, or through an unsolicited email. Identity theft could be the worst holiday surprise of all.