8 Tips for Using Your Credit Card for Holiday Shopping

The biggest shopping season of the year leads a lot of people into debt because they overspend with their credit cards. It’s not a bad thing to use your credit card during the holidays. The key to avoiding debt and future financial troubles is to use it responsibly. Follow these eight tips to maximize your credit card use without running up big balances.

Use only one credit card. The more credit cards you use, the harder it is to stick to a budget and the more likely it is that you’ll overspend. Using a single credit card makes it easier to manage your overall spending and helps keep your spending in check. The credit card with the most available credit is often a good pick because you have more spending room.

Maximize your rewards. If you have a credit card that pays rewards, you can max out your credit card rewards by using it for your holiday shopping. Take inventory of you rewards cards and see which pay the most rewards for the type of shopping you’re planning.

Take advantage of a 0% APR on purchases. Many credit cards offer 0% introductory APR on purchases (and balance transfers). Use one of these credit cards for your holiday shopping to get more time to pay off your balance with no finance charges. Don’t confuse 0% introductory APR for deferred interest. The latter requires you to pay your balance in full by the end of the interest-free period to completely avoid interest charges.

Watch your balance and available credit. Download your credit card issuer’s smartphone app and log on periodically during shopping to keep an eye on your credit card balance. Slow your spending as you approach your credit limit to avoid maxing out your credit card.

Use a credit card instead of debit card for online purchases. Debit cards branded with a major credit card processing network carry the same fraud protections as credit cards. However, if a thief gets access to your debit card, you lose access to the funds in your checking account until the bank resolves the error.

Avoid store credit cards. The 10% discount you get from signing up for a store credit card is especially tempting during the holiday season. The high interest rate and low credit limit make store credit cards not worth it. Turn down store credit cards and stick to the card you’ve already designated for holiday spending.

Don’t take out a cash advance. A cash advance is one of the most expensive credit card transactions because interest starts accruing on the day you take out the advance. Plus you’ll have to pay a cash advance fee. Avoid credit card cash advances during the holiday season and any other time of year.

Create a solid shopping plan to keep you from overspending. Set a budget for how much you want to spend this year on gifts. Then, make a list of all the people you’re gifting to this year. Cross recipients off your list as you purchase for them and stop shopping once everyone has been crossed off the list.