Five Credit Card Mistakes To Avoid Over The Holidays

Post by Sharat on December 7, 2017 · Under credit cards · Comment 

Its officially Christmas season already with the holiday less than a month away. For Australians this means using their credit cards to help pay for the costs of the holiday season. Irrespective of whether you intend to use your credit card to purchase gifts, enjoy a night out on the town or buy tickets for an amazing New Year’s Eve party you should be smart about using your card. Here are the biggest mistakes people make using their credit cards at this time of year and the best ways to avoid them whilst still having fun.

  1. Spend just to earn points  

Its no secret that using a rewards card is a great way to receive a freebie as a result of your Christmas spending. However, many people fall into the trap of trying to earn as many points as possible by charging everything to their credit card without fully understanding that if they fail to pay off their entire balance, the cost of interest payments alone will negate any rewards they may have earned. If you cannot pay off your balance immediately after Christmas don’t reach for your rewards card and use a low interest card instead. The difference in interest rates you will have to pay will more than make up for any points you would have earned.

  1. Don’t track your spending     

Tap-and-go is incredibly convenient unfortunately this makes it easy to generate a huge credit card bill before you realise it. Instead of continuously handing over your card until it finally gets rejected, make sure you take the time to check your outstanding balance. There are a ton of apps and alerts that are linked to credit cards and you should make use of them. For example, it is possible to establish a lock and block feature that will limit your spending to a specific amount or block you from making purchases altogether. You can also request notifications that will be sent to your phone and allow you to stay on top of your outstanding balance every month.

  1. Buy now, regret later      

Everybody loves getting and giving presents at Christmas time, but it is very easy to go overboard during the annual spending season by making impulse purchases using your credit card. This is one of easiest ways to make a silly mistake. Before you make a purchase using your credit card make sure it is worth the cost and if you are going to pay it off over the course of a few months, the interest charges as well. If you have to spread the cost of Christmas over the rest of the year then you should apply for a 0% purchase rate credit card which will allow you to pay off your balance over a longer period of time without incurring expensive interest rate charges.

  1. Hitting the ATM

One of the worst ways to use a credit card is for a cash advance. This is because it is the most expensive way to borrow money resulting in interest rates that are higher than what you would pay on purchases. There is simply no reason to withdraw cash using your credit card because most stores accept card payments. So as a rule, avoid cash advances and use your credit card to make the payment instead.

  1. Check out

Whilst we all slow down over the Christmas period as we celebrate with friends and family, you should be aware that your bank is definitely not taking a holiday. This means you need to make sure you continue to pay your bills on time. Late payment fees cost a lot of money and you would be better off using the charge to pay for a nice bottle of wine instead. So long as you make the minimum payment you are good because not only will you avoid a black mark on your credit history but you won’t have to pay any late fees.

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