Can your credit card survive Christmas?

It's easy to get caught up in the holiday spirit of spending. After all, who doesn't enjoy buying gifts for friends and family? But if you don't keep a watchful eye on your budget, eggnog won't be the only thing giving you a holiday hangover. Come January, you'll be faced with a barrage of credit card bills.

grumpy-holidays

Fortunately, Myron Knodel, a financial planning expert at Investors Group in Toronto, says there are ways to protect your savings this holiday season -- and it doesn't require becoming Scrooge. Here's how:

Mo' cards, mo' problems
Think owning more than one credit card will help cushion your bad spending habits? Think again.

"Using multiple credit cards to pay for gifts and holiday extravagances makes it more difficult to track what your spending limits are and payment due dates," says Knodel. "While you may feel good about the points you are racking up, they can be a surefire way to get in over your head if you're not spending wisely and within your means."

Knodel's Quick Tips:

  • Create a schedule to keep track of when each credit card bill is due to avoid interest charges adding up.
  • Set up an online account to access your credit card activities and monitor the balance regularly in order to keep tabs on your remaining budget. It'll also help you avoid statement surprises later.

Spend what you have
Don't be so quick to reach for your credit card. Instead, try purchasing holiday gifts with cash or a debit card.

"It's easy this time of year to get caught up in the spirit of the season and let your generosity get carried away with gift giving and holiday expenses," says Knodel. "Paying as much as you can with cash or by debit card will help keep you stay on track, avoid over-spending and accumulating debt."

Knodel's Quick Tips:

  • Create a budget and make a list of everyone you need to buy for before you head to the mall. That way, you'll avoid impulse purchases and spending more on last-minute gifts.
  • Don't get caught by surprise. Set aside some funds on a weekly basis before the spending begins so you have enough cash in hand by the time the shopping sprees start.

Look to the future
It's easy to get caught up in the moment but now's the time to really reflect on what a purchase might mean to your financial stability. "Buyer's remorse and credit card debt is a terrible way to ring in the New Year," warns Knodel. "Credit card over-use can be deadly to your financial well-being. Letting interest charges add up on large balances that you can't pay off right away, or delaying payments can have a negative impact on your credit rating in the long-term."

Knodel's Quick Tips:

  • The more you save, the more likely you'll be to react effectively to ‘rainy days' or financial emergencies that might unexpectedly pop up down the road.
  • Skip the window shopping if you want to avoid purchasing items that are nice but will eat away at your expenses down the line. 

See related: How to turn your trash into cash; 6 tasty ways to cut food costs

Published December 9, 2011

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