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Avoiding credit card debt during the holidays

Residents in Massachusetts will often make several shopping trips during the holidays. In order to get all the gifts for loved ones, some might be tempted to spend more money then they intend. This could lead to using credit cards and racking up more debt than they can handle. While some balance on a credit card in manageable, if this debt gets out of hand, consumers might encounter major financial problems.

In order to avoid the dangerous habit of overusing credit cards while shopping during the holidays, consumers should follow these three steps. First, credit card holders should read the fine print for their cards. The interest rates are likely different for each card and, in some cases, store cards offer some discounts each time their card is used. These perks should be weighed and should not be overused, as it may cause the balance to get much higher than expected.

Second, consumers should consider any rewards programs they are enrolled in through credit cards. Cashing in these rewards could allow them to buy gifts or get gift cards for loved ones this holiday season. This would also help them avoid spending money on a gift and possibly allow them to use that money to pay off some cards.

Lastly, consumers should have a repayment strategy. Establishing a budget for holiday shopping provides the consumer with a realistic plan to pay off what they put on credit cards. Moreover, making a budget could assist them in developing a spending plan, which could help them use more cash and put less on their credit cards.

While developing a budget is a resourceful way to limit spending and credit card debt, some consumers nevertheless struggle with credit card debt. This could turn into a huge financial problem for the debtor. In these cases, consumers may need to consider debt relief options. Depending on their circumstances, filing for bankruptcy could be their best choice. No matter what process or steps the debtor takes to regain financial control, they should seek guidance about the options available to them.

Source: Fox Business, "3 Tips for Using Credit During the Holidays," Nov. 28, 2014

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