How to Use Your Credit Card for Holiday Shopping

With the holidays coming, you’ve probably already pulled out the credit card and are ready to wield it in whatever way necessary to put smiles on the faces of your family and friends. With the pandemic ongoing and winter creating greater challenges for shopping, you may be considering shopping online as a general rule. But whether you choose to shop online or prefer to brave the stores, I’ve got some solid advice you can use to protect your card and your finances this holiday season.

PLAN TO SPEND ONLY WHAT YOU CAN PAY OFF

This is good advice for shopping at all times of year, right along with saving up for big expenditures, to prevent you from racking up debt. If you have saved ahead of time, great work! If not, assess what you can save between now and when you plan to shop and what you can afford to spend. If you don’t have a lot, then don’t spend a lot. Figure out what you can afford and plan to spend only that amount.

Writing out a budget for the coming months is one route to take, but you probably have a relatively accurate idea of what you have in savings and what you can realistically spend for the holidays. Place that number on a sheet of paper and then make a list of all the people you want to buy for. Then divvy up the amount you came up with to cover those on your list.

Remember that you don’t have to buy everyone a gift. There may be a handful of people you could make a homemade gift for. You may want to give a specific type of low-cost gift to another handful of people (like socks, decorations, etc.). And then you’ll have a handful of people you want to spend more money on. Determine your holiday budget, create your list, and then stick to it.

USE YOUR “REWARDS” CARD

This method is only effective if you can pay off your credit card at the end of the statement cycle. I mention it because you can make money (or points, or some other gift) when you purchase things on your rewards card. However, if you aren’t able to pay off your card at the end of the payment cycle, you may pay more on interest charges than you made in points or cash.

I love this idea because you can actually make money this holiday season if you are good at budgeting your holiday funds and paying everything off before interest is charged. Just be careful not to get yourself into debt on a high-interest card.

SHOP SAFELY

Remember the days when one of the biggest threats while shopping was someone pulling your wallet from your pocket? It was easier to protect yourself from that type of maneuver than those of cyber thieves. While you’re shopping this holiday season, recognize that this is THE time of year for online fraud. For more in-depth advice, please read this blog from one of our fraud experts, but here are some basics to remember:

• If you’re shopping online, make sure you only enter card information on websites you are certain are legitimate. Though sites that have HTTPS in the URL were once considered safe, this is no longer always true, so be careful and shop only on trusted sites.
• If you’re shopping in person, don’t flash your card around. Hold it close to protect the information on it and use a chip-enabled or contactless card if possible, or pay with your phone.
• If you’re at the gas pump, shield the movement of your hand as you type any information into the keypad to prevent probing eyes or cameras from stealing your personal information.

A little common sense can go a long way when it comes to your financial safety. One thing to keep in mind is that fraudsters, like most criminals, are generally looking for easy targets. Make yourself a hard target by taking precautions when you shop. The harder you make it for them to steal your information, the less they will focus on you.

SET ALERTS OR REVIEW YOUR STATEMENTS

As you make more and more purchases on your card, it can be more difficult to catch fraudulent charges simply because you’ve forgotten what you’ve purchased. The best method of protection is to set alerts on your credit card (or your debit card, if that’s what you’re using) so that you get a text every time your card is used. If you don’t have that option, you should check your account regularly—every few days or once a week—to make sure extra charges aren’t slipping in under the radar.

DAMAGE CONTROL

It is rare that I wish that people stop reading one of my blogs before they reach the end, but in this case, I hope you don’t have any need for the rest of this information. This last piece is for you only if you did NOT follow the advice offered above.

If you find that you’re not able to pay off your cards in time to avoid fees and high interest charges, reduce costs by moving your high-interest balances to more affordable options like zero- or low-interest credit cards or a low-interest line of credit or loan. Anything you can do to minimize the cost of your debt can ease your post-holiday financial pain.