10 Tips for Smart Holiday Credit Card Use

a group of young friends gathered around a table laughing and celebrating the holidays

You could be skating on thin ice if you’re not mindful of holiday credit card spending. Splurging could cause you to fall through the ice into unmanageable debt— chilling indeed! Keep your head above water by using credit cards wisely this season. 

Here are 10 ways to stay on track.

  1. Set a holiday spending limit. Decide on a holiday budget before you make your first holiday purchase. Otherwise, your spending could snowball beyond your credit limit.
  2. Santa makes lists—and you should, too. Write down all the events you plan to attend or host. Determine a budget for each one, then remain within that budget. With gift-giving, make a list—and check it twice—of all the gifts you plan to purchase. If you stay within your holiday spending limit, you’ll be able to comfortably repay holiday credit card charges within a few months.
  3. Beware of holiday credit card scams. Fraudsters (aka Scrooges) are hoping you’ll gift them your confidential financial data so they can go on a shopping spree at your expense. Scrooges masquerade as Santa’s helpers by pretending to be:

    * Legitimate charitable organizations attempting to convince you that your donation will help those in need.
    * Trusted shipping services claiming you’ve missed an important delivery and need to provide your credit card information to reschedule it.
    * Well-known national retailers offering substantial discounts—but only if you click on the hyperlink sent to you via text message or email. Bah, humbug!

    Learn more about holiday scams by visiting the Federal Trade Commission’s page on avoiding and reporting scams. This government agency posts new alerts several times a month.
  4. Use the credit card with the lowest credit line available. Juggling multiple credit cards during the busiest time of year will give you a brain freeze without the ice cream indulgence. If you use more than one card, you’ll need to remember how much you’ve charged on each one. That’s enough to drain the joy out of a joyful time of year.

    Using a single credit card for all your seasonal purchases will make it simpler to keep track of your spending. Plus, a card with a lower credit line makes it easier to stick to a budget and score all those reward points. (But remember: keep the balance on your card less than 30 percent of your available credit, or else it could affect your credit score!)
  5. Create a holiday repayment plan now. When you're done shopping for the season, plan to repay credit card debt quickly. Remember, for every month you carry a balance, those interest charges will nibble away at any cash register savings you realized.

    Review your household budget now to determine how quickly you’ll be able to pay off new credit card charges. If it will take several months to pay off the balance, consider transferring it to a lower-interest rate credit card that doesn’t charge a balance transfer fee. This could help reduce the total interest paid.
  6. Gift your credit card rewards to charity. Some credit cards, like Hanscom FCU's CASH+REWARDS World Mastercard, allow cardholders to donate their earned rewards to the nonprofit of their choice. Giving to your favorite charity through your rewards points lets you keep more cash on hand for other expenses. Think of it as a gift that keeps on giving.
  7. Use rewards points to cover specific expenses. Instead of draining your savings to cover the costs of holiday travel, meals, or gifts, redeem your credit card rewards points to pay for a category of expenses. For example, redeeming all your points for gift cards to your favorite retailer could help lower your out-of-pocket costs for holiday decor.
  8. Review prior holiday spending. The end of the year is traditionally the time we reflect, so take a look at last year’s credit card statements and receipts. Did you follow a budget then? If so, did it work? If not, think of ways you can spend less this year.

    For example, instead of purchasing gifts for those on your list, consider putting together a festive package filled with homemade baked goods. Hosting a meal? Invite guests to a potluck, where everyone brings a covered dish to share.
  9. Add your credit card to your digital wallet. You’ll be able to leave your physical credit card at home and complete in-store transactions with your mobile device. When you pay for purchases using the credit card stored in your digital wallet, your actual card details are encrypted during the transaction, making it harder for Scrooges to steal your financial data.
  10. Pay for travel-related expenses using your credit card. You may be able to skip the optional rental car coverage if you pay by credit card. Some credit cards come with no-cost rental insurance coverage if you use the card to pay for the rental. Review your personal auto insurance policy and credit card coverage details to learn about your coverage options.

Have a joyous holiday season without fearing that financial mistakes could leave you out in the cold. Careful planning now could help usher in a more prosperous new year.

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About Author

Tracy Scott
Tracy Scott

Tracy Scott is a freelance writer who specializes in personal finance and higher education. Her reading list always includes a seemingly odd mix of financial literacy articles and sweet romance novels. Tracy holds a BA in Psychology from UT Austin and has a background in higher education regulatory compliance.

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