No matter how carefully we budget and save for the holidays, most of us end up swiping a credit card for at least a few purchases. Here’s the good news: You don’t have to feel guilty about it. If you use your card strategically, it can give you a financial advantage during the holiday spending blitz. Here’s how:
1. Maximize your rewards
Gift shopping is a great way to rack up rewards points or cash back—especially when you consider that the average American will spend $1,000 or more on gifts and décor within the next month. All those rewards can help offset your holiday costs, so it pays to take full advantage of them.
But you should also choose your rewards card wisely. Make sure you use a card that offers rewards for the types of purchases you’re making. Watch out for cards that lure you in with attractive rewards and then hit you with a higher interest rate. And avoid making extra purchases just to rack up more points. The best way to maximize your rewards is to pay your balance in full each month, so don’t charge more in December than you can pay off in January.
If you’ve been thinking about getting a rewards card, now is the best time to do it. OCCU credit cards come with a 10,000-point signup bonus when you spend $500 in the first 90 days, which can help take the edge off your holiday spending. With our Duck and Beaver cards, you can even earn up to 4x the points for every dollar you spend at certain merchants.
2. Pay with your lowest-interest card
If you’re not able to pay off your holiday shopping balance right away, you’ll need to factor interest into your holiday budget. Over time, a high-interest card can increase your holiday costs rather than offset them, even if you earned rewards. If you’ve got more than one credit card to choose from, pick the one with the lowest interest rate to avoid holiday debt that continues to grow well into the new year.
Have good credit but a high annual percentage rate? Consider shopping around for a lower-interest card before you start shopping for gifts. With our NICE PERKS® card, for example, you can get an annual percentage rate as low as 11.49%*. Added bonus: No interest for the first year, so you’ll have plenty of time to pay off your holiday spree.
*Click here for additional disclosures: NICE PERKS card.
3. Protect your purchases (and identity)
Even if you’re reluctant to take on any debt, sometimes paying with a credit card is safer and smarter than using your debit card—especially during the holidays or if you’re shopping online. No one wants to believe they could become a target for identity theft, but the reality is that unscrupulous scammers often strike during the holidays.
If someone steals your credit card account information, you may not be held responsible for the charges they rack up. The protection provided by credit cards is especially helpful with online shopping, where your information is most vulnerable.
Pro tip: Do all your online shopping with just one credit card to limit your risk.
Pro tip #2: Choose a card with enhanced fraud detection and secure microchip technology to help keep you safe.
4. Make a repayment plan
The sooner you can pay off your holiday credit card debt, the less interest you’ll have to pay on it. Before you start spending, make a plan for how you’ll pay it back. Consider how much you can afford to pay on your balance each month and how long you’re willing to let the debt linger. This will help you determine what your holiday budget should look like.
Now you’re ready to be a financially savvy shopper. Need a better credit card to go with those smarts? Check out our credit card offers.