Holiday Season Spending

Giving thanks over a turkey dinner, chestnuts roasting on an open fire, mistletoe, hams, and tree decorations… the holiday season is here! 

It’s always tempting to take advantage of those specials being offered by stores this time of year. However, without a healthy monitoring of your spending and credit card activity, there are some costly blunders that can be made.

The average person will spend over $1000 during the holiday season this year, which is up from last year, in part because of consumer confidence in a healthy economy. Keep in mind, that’s over and above your normal spending habits and travel costs.

On average, Americans travel about 300 miles (most likely to be with family over the holidays). So unless you have a nice holiday bonus coming your way, here are some things you can look out for:

Deferred interest

Stores will often have special store credit cards with deferred interest. While the offer might seem attractive for large purchases, the entire amount has to be paid off before the end of the advertised “zero interest” period. Even if you only owe one penny at the end of that time, you will be charged the full interest for the whole introductory period. 

The other thing about store credit cards is that unless you’re a regular shopper at that particular store and it isn’t just a Christmas Eve purchase, it may seem like a good idea to get that 20% off the purchase by opening a store credit account, but when you do the math on what it takes to really benefit from the action as a year-round decision, you might be surprised to realize how little of a deal there is – even more so if you'll carry a balance on that card.

Track Spending

Uncle Joe, the nieces and nephews, the in-laws, your cousin’s new boyfriend… they all need gifts, don’t they? Don’t let yourself get blinded by the holiday spirit to the point where you lose track of your budget constraints. The antidote is to come up with a dollar amount that you are okay with spending. And do not go over it. Even if that means you have to get creative with some of your gift choices.

And remember – if you’re making purchases on credit cards, then you have to consider the revolving debt that you’ll carry into the new year, if you don’t have a way to pay off that debt within a reasonably short time.

Watch out for scams

Technology has outgrown the pickpocket in the mall. Nowadays we need to be especially wary of cyber thieves looking to take advantage of our spike in credit card usage during this time. Throughout North America, there have been escalated reports of fraudulent online stores and fake shopping apps being created, just waiting for people to find them, and type in their credit card information. So be vigilant.

Rewards

Discover Card did a survey on consumers, and 46 percent of shoppers said their main reason for using credit cards for holiday shopping was to earn rewards. Sounds good, if you're stacking up rewards and paying your cards monthly. But be careful not to overspend just to get a bunch of rewards. Drowning in credit card debt isn't much of a reward.

 

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