![]() Instead, opt for your credit card with the lowest APR. If it will take more than 3 billing cycles to pay offĪ debt, don’t bother with a rewards credit card. The same is true for making a series of purchases that will need to be paid off over time. If you purchase a big-ticket item that will take some time to pay off, don’t use a rewards credit card. 2: Aim for low APR if you won’t pay off the balance quickly That means it will cost more money to eliminate the debt. You don’t actually earn anything overall and they tend to have higher interest rates. In this case, it doesn’t make sense to use a rewards credit card. If you don’t do this, interest charges will offset any rewards earned within 2-3 billing cycles, depending on your APR. So, in order to ensure the 3% cash back that you earn isn’t offset by 20% APR, you must start and end the billing cycle at zero. If you start a billing cycle with a zero balance, then pay off all the purchases you make within that billing cycle, no interest charges apply. However, there is a way to use credit cards interest-free. Use these tips to help you avoid a holiday debt hangover in the New Year: 1: Start with zero balancesĬredit card rewards are quickly offset by interest charges brought on by high credit card APR. But when used correctly, you can maximize the rewards you earn while you minimize interest charges and the risk of debt problems. However, they also make it easier to overspend and amass high interest rate debt that’s tough to pay off. Tip No 3: Be strategic about using credit cards this seasonĬredit cards can be an extremely useful tool during the holidays. In other words, you saved $100, but you spent $1,196.95 extra. That’s right – you’d more than the original amount purchased on accrued monthly interest charges. If you only make minimum payments, it would take 128 months to pay off the balance in full. But you put the purchases on a credit card with 20% APR because you can’t afford to make it in cash. Otherwise, if you’re only making minimum payments, then monthly credit card interest charges will quickly offset those Black Friday savings.”įor example, let’s say you spend $1,000 on electronics on Black Friday and you save $100 on your purchases. But be careful that you’re actually getting a good deal and that you’ll be able to pay off the purchase quickly. If you’re going out to purchase electronics, your personal non-holiday tab will be much higher. “According to the NRF, the average household will spend over $150 for non-holiday purchases to take advantage of big discounts offered on Black Friday and Cyber Monday,” Lewis-Parks continues. 2: Consider non-holiday purchases carefully, even if they offer big deals So, you probably don’t need to rush out and buy those this weekend unless you plan to deck the halls over the next few days.” Tip No. Decorations get cheaper the closer you get to Christmas. These two shopping days are usually the best time to buy gifts. ![]() “Take some time this week to look at deals coming out for Black Friday and Cyber Monday. ![]() “Once you know how much you need to spend and what you need to buy, you can divide and conquer,” Lewis-Parks continues. That includes not only gifts but decorations, food, postage and shipping, travel expenses, hosting expenses if you’ll have guests and money to cover any costs for holiday parties. The idea is to work out your holiday budget, making sure to include all the expenses you need to cover. This will help you stick to cash instead of pulling out plastic for your holiday expenses.” “But the earlier you start shopping, the more paychecks you have to spread out the cost. “I think at least some shoppers are getting tired of retailers starting holiday promotions earlier and earlier every year,” says April Lewis-Parks, Financial Education Director for Consolidated Credit. The NRF found that 60% of shoppers have waited until at least November this year to start shopping. Not only do holiday shoppers plan on spending more this year, but they’re also shopping later. 1: Start shopping now to spread out the cost of your holiday budget $31 on gifts for others, such as pets and self-gifting.$154.53 on non-gift purchases that take advantage of holiday promotion deals, like Black Friday. ![]()
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