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Putting Christmas on credit

By Janna Herron · Bankrate.com
Wednesday, November 2, 2011
Posted: 4 pm ET

With Halloween costumes stuffed into the back of the closet, everyone is now looking toward the rest of the holidays this year. And that could mean racking up credit card debt.

A USAA survey released Tuesday found that almost half of those polled plan to pay for holiday gifts with a credit card. Of those, more than a quarter said they will wait a few months to pay off the balance or will only make the minimum payment.

That could be a recipe for quite the holiday hangover.

"Credit cards have many benefits, including general convenience, the ability to reap rewards, and fraud protection," June Walbert, a USAA Certified Financial Planner, said in a press release. "However, financially responsible shoppers must remember to pay off the balance each month to avoid paying interest fees."

Set a budget to keep the holiday spirit from getting the best of your financially disciplined self. Commit to paying off the entire balance and if you find that you can't, pay as much as you can each month to bring the balance down to zero faster.

And when you use your credit card, take advantage of any perks such as using rewards points to buy presents.

For example, Chase on Monday rolled out its annual holiday promotions for its Chase Sapphire, Chase Freedom and Ink from Chase cardholders. They include merchandise auctions, bonus rewards points and shopping discounts.

Here's the rundown:

Cardholders can use rewards points to bid on popular holiday gifts such as PlayStation 3 or a Sony HDTV. The auctions run every weekday through Nov. 25.

Cardholders will get an extra 10 rewards points for every dollar they spend at certain retailers at UltimateRewards.com from Nov. 15 through Dec. 12.

Cardholders will get 10 percent or 20 percent off certain gift cards through Ultimate Rewards through Jan. 4. They will also save 25 percent on purchases through the Ultimate Rewards site on Cyber Monday, Nov. 28.

Spend smart this holiday season to avoid the January money blues.

What are your holiday spending plans this year?

Follow me on Twitter: @JannaHerron

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2 Comments
Tom
November 03, 2011 at 10:57 am

I always pay (almost) everything on credit...and of course pay the balance in full when it's due. And of course I never have the balance on my credit cards exceed the available cash in my bank account. Works great, plus I get a few hundred $ back every year thanks to 1% cash back. I only pay with debit/cash/check if I can negotiate a cash-discount greater than 1%.

Wolverine
November 03, 2011 at 7:25 am

I'm using cash for my Christmas gifts.
If I have to put anything on credit, then that means that I can't really afford it. I'm sorry to anyone who gets offended by my lesser gifts this year, but I'm not paying an interest on someone else's gifts... unless I used my credit card to rack up points and paid the balance in full.

Sadly, a lot of people would rather buy on credit and then pay 20% interest on "gifts".