The holidays are a time for celebration, connection, and – let’s be honest – spending. From buying gifts for loved ones to traveling to see family or hosting festive gatherings, expenses can add up quickly.
For many, it’s easy to let credit card balances creep up, making it harder to stay on top of monthly payments. You may be heading into the holidays and feeling unsure about how to manage your credit. With a little planning and the right support, you can enjoy the season without letting your finances get out of control.
Read on as we explore some strategies that can help you keep a handle on your borrowing during the holiday season. We’ll also discuss the benefits of partnering with a certified, nonprofit credit counselor if you need help along the way.
Start with a holiday budget.
This is the best thing you can do before holiday fever sets in. A holiday budget gives you a clear picture of how much you can afford to spend without negatively impacting your finances. To build your budget, consider the following:
- Gifts. Make a list of people you plan to buy gifts for and allocate a reasonable amount for each person. Don’t feel pressured to overspend. Thoughtful gifts don’t have to break the bank!
- Travel. If you’ll be leaving home to visit family or friends, estimate the cost of transportation, accommodations, and any extra expenses that might come up during the trip.
- Food and entertainment. Whether you’re hosting a holiday dinner or attending festive events elsewhere, set aside funds for groceries, dining out, and social activities.
Once you have your budget in place, stick to it. Carrying a list when you shop or setting alerts on your credit card for high spending can help you stay within your means. It’s easier to enjoy the holidays when you’re not worried about overspending.
A high credit score can give you access to better interest rates, higher credit limits, and more financial flexibility in the future
Avoid using credit cards for non-essential purchases.
It can be tempting to rely on credit cards to cover holiday expenses, especially if you’re trying to stretch your budget. Yes, they’re convenient, but credit cards can quickly become a burden if not managed carefully.
Whenever possible, avoid using credit for non-essential purchases. Instead, try paying with cash or a debit card to avoid racking up high balances. If you do use credit cards, make sure to:
- Pay off balances as soon as possible. Ideally, you’ll want to pay off any charges on your credit card before they start accruing interest.
- Stick to one card. Using multiple credit cards can make it harder to track your spending and manage payments. Stick to one card to simplify things.
- Watch your credit utilization. This is the ratio of your credit card balances to your total credit limit. Keeping this number below 30% is important for maintaining a healthy credit score. If your combined balance starts to climb too high, try making an extra payment before your statement is due.
If you’re worried about how to manage your credit effectively, or if you’re finding it hard to stick to these guidelines, consider working with a credit counselor who can help you develop a plan.
Keep your credit score in mind.
Your credit score plays a significant role in your overall financial health. The holiday season is a good time to be mindful of it. A high credit score can give you access to better interest rates, higher credit limits, and more financial flexibility in the future. However, the reverse is true if your score starts to drop because of holiday spending.
Here are a few ways to protect your credit score:
- Make payments on time. Payment history is one of the biggest factors affecting your credit score. Missing a payment, even by a day or two, can hurt your score. Be sure to set up automatic payments or reminders to stay on top of your bills during the busy holiday season.
- Monitor your credit report. Keep an eye on your credit report to ensure there are no errors or signs of identity theft. You’re entitled to a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year. Consider reviewing yours before the holidays to catch any issues early.
- Avoid opening new credit accounts. While it can be tempting to take advantage of store credit cards or holiday promotions, opening new accounts can lower your credit score temporarily. Doing so can also put you in a precarious position if you plan on making a major purchase after the holiday season that requires credit, such as buying a home. It’s usually best to stick with your existing accounts unless you truly need additional credit.
Consider a credit counseling session.
If you’re unsure about how to best manage your credit this holiday season – or if you’re worried that holiday spending could get away from you – now is the perfect time to connect with a certified, nonprofit credit counselor. The professionals we partner with on the CredEvolv platform can provide personalized advice and tools to help you stay on track financially, even during the most expensive time of the year.
How can a credit counselor help?
- Debt management plans. If you’re already carrying debt into the holidays, a credit counselor can help you create a realistic plan to pay it off. They may be able to negotiate lower interest rates or reduced monthly payments with your creditors, giving you more breathing room in your budget.
- Budgeting assistance. If you’re struggling to stick to your holiday budget, a credit counselor can work with you to identify areas where you can cut back or adjust your spending. They can also help you create a plan to pay off any balances quickly, so you don’t carry holiday debt into the new year.
- Credit education. Sometimes, the best way to manage credit effectively is to understand how it works. A credit counselor can help explain how different factors impact your score – like credit utilization, payment history, and new credit inquiries – and offer tips to improve it.
- Empathy and emotional support. The holidays can be stressful, especially when finances are tight. The credit counselors we partner with provide more than just financial advice – they offer genuine caring and encouragement to help you feel confident about your financial future.
Make a plan for the new year.
It’s easy to get caught up in holiday spending. Don’t forget that the new year is just around the corner! Take some time now to think about your financial goals for the next 12 months. Do you want to pay off credit card debt? Improve your credit score? Start saving for a big purchase or trip?
Setting financial goals before the holidays can help you stay focused on making more mindful spending decisions. Plus, starting the new year with a plan in place can set you up for success.
Final thoughts: ’Tis the season to be smart about your credit!
The holidays should be a time of joy, not stress. We can’t help you with family strife, but we can assist with your credit and finances!
With a little planning, smarter spending, and the support of a certified, nonprofit credit counselor of you need it, you can manage your credit effectively and enjoy the season without worrying about overdoing it with the generosity. Remember, it’s not about depriving yourself of holiday cheer – it’s about making financial decisions that will put you in the best possible position moving forward.
So, whether you’re buying gifts, traveling, or simply enjoying the spirit of the holiday season, do it with a peaceful mind! Stay focused, stick to your plan, and don’t hesitate to reach out to CredEvolv for help if it gets to that point. You’ll thank yourself when the new year rolls around and you’re on solid financial footing!