The holiday season is the happiest time of year—and often the most expensive. Having the cash at hand to pay for holiday travel, gifts, feasts, decorations and celebrations can be difficult. But indiscriminately throwing your credit around can lead to a new year full of fiscal regret.
The financial experts at Utah First Credit Union want you to have more cheer this holiday season with less credit concern—here a few helpful tips:
1. Choose Your Credit Card Wisely
With so many credit card offers out there, it can be difficult to decide which one is best for you. However, take the time to pick a card that will work for you, not against you. Below are a few pointers:
– Compare both introductory and long-term interest rates.
– Check terms and conditions for information regarding minimum payments, late and over-limit charges and annual fees.
– Choose a card with good balance transfer options if you currently carry high-interest balances.
2. Avoid Flashy Store Offers
Seldom can you get through a checkout line without being offered a store-specific credit card; and they all offer flashy “deals” such as rewards programs or discounts on your first purchase. But these one-time savings offers can cost you big in the long run.
The average annual percentage rate for a store-issued card is at least 5% higher than standard credit cards—and they can be as much as double that of credit cards issued by credit unions. Additionally, store cards frequently set low credit limits, which can mean a hit to your credit score if you make a large purchase. Credit agencies frown on accounts with high-balance-to-limit ratios.
3. Use One Credit Card
Charging holiday expenses to multiple credit cards can cause major headaches later in the year. There are several reasons why:
– Juggling multiple credit accounts can be challenging. Staying on top of several payments, different due dates and unique terms for two or more credit cards can result in poor credit behavior like missed payments and growing balances.
– Minimum payments can add up quickly. The combined total for multiple cards is often exceeds the monthly payment on just one. Also, your payments often go to interest charges rather than paying down balances.
– Multiple accounts/credit inquiries can hurt your credit. Carrying multiple credit card accounts, especially ones with high balance-to-available-credit ratios, can drag down your credit score. Additionally, a spike in inquiries into your credit sends the message to creditors that you may be desperate to obtain credit due to financial mismanagement.
4. Consider a Balance Transfer
Transferring your high-interest balances to a low-interest card can save hundreds—even thousands—of interest dollars each year. Consider the following scenario: Transferring $5,000 from a credit card with an 18.9% APR to one with a 4.95% APR will save you a whopping $697.50 in the first year alone. That can buy a whole lot of merry.
5. Think Beyond the Holidays
Ask yourself how you will use your credit card in between holiday season. Yes, stuffing those stockings is important, but selecting a card that will benefit you 365 days per year is the best bet. Some questions to ask:
– Does the credit card company take the time to consider my personal situation when determining my eligibility?
– What type of customer service will I receive in the future?
– Have others had a positive or negative experience with this creditor?
If a new credit card is on your holiday shopping list, take advantage of our great 4.95% introductory offer on purchases and balances transfers. (Valid through January 31, 2015). Apply now.
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