Holiday Tips: Credit Do’s and Don’ts

Apprisen wants to empower you with the knowledge you need to have a fulfilling holiday season without damaging your credit score. Here are some Do’s & Don’ts to help you avoid just that.

Do’s

If you have planned for the holidays by saving all year, great! But paying with cash won’t help improve your credit score. Use your credit card to make the initial purchase, and then pay off the card in full with savings to avoid paying interest. This will help improve your credit score. The key is to be disciplined to pay off the card right after the purchase.

Haven’t opted out yet? Now is the time. Soon card issuers will be sending “pre-approved” credit offers. You could receive offers in the mail. Multiple offers in your mailbox increase your risk of Identity Theft and tempt you to open and use credit you really don’t need. You will have to pay it back with interest unless paid off in full right away. Call 1-888-5-OPTOUT (1-888-567-8688) to opt-out of getting pre-approved credit offers.

Be aware of your credit card limits. Did you know that if your balance goes over 30% to 35% of your available limit, you start to negatively impact your credit score? Know your limits and calculate 35% of the limit. You should set this as the maximum amount you can spend on that card. Put a post-it note on the card to remind yourself.

Don’ts

When the store says you can get a percentage off your purchase for applying for a card, understand that every time you apply for credit it lowers your score. Don’t open a credit card unless it is a store you shop at frequently and preferably will receive benefits from the card such as coupons, % off with every card purchase, or cash back, etc. Department store credit cards typically have higher interest rates.

Don’t open a card just for the holidays, pay it off, and then close it. A part of your score is based on length of history. It is better to not open an account than to open one and then close it immediately.

Credit cards are revolving lines of credit; they should not be used like an installment loan. Maxing out the available limit and then paying it off over time through minimum payments only negatively impacts your “credit utilization” and you will end up paying back much more with added interest.

If you weren’t financially prepared for this holiday season, start early and make sure you are all set for the 2015 holidays. For more ideas that will help you control your holiday spending, Download Apprisen’s Holiday Spending Guide.

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