4 Credit Card Traps to Avoid during the Holidays
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November 16, 2015
Written by: Kristin Gross, Asset Building Coach at La Casa de Esperanza
Although the holidays are a joyous time of year, they can also cause major despair for your finances. This year, before you pull out the plastic to pay for those Christmas gifts check out these 4 common credit card traps that could end up costing you more money.
- 0% or Promotional Interest Rates – Introductory promotional rates are everywhere! However, make sure you read the terms before you make the purchase. These low introductory rates often charge steep penalties if you make a late payment, miss a payment, or don’t pay off the purchase by the time the introductory period is over. What was once a great deal can now be hundreds of dollars of accrued interest added to your credit card.
- Use your credit as an emergency fund – How many times have we told ourselves that we are just going to keep our credit card around in case of an emergency? What was a $300 or $500 unexpected expense can end up costing us hundreds more because of the added interest? Not only are we paying more in interest, but now you have just added another monthly payment to your budget. It’s amazing the difference that having even a small dollar amount in an emergency fund can have. Don’t use the card unless you are able to pay it off in full the next month.
- Use credit cards to earn points – Credit card companies offer great incentives this time of year to use their cards. Who wouldn’t want to get a free iPad or airline flight just by purchasing items they would normally make anyways? However, if you aren’t able to pay off your credit card in full each month, you might want to look at the real cost of earning those points. These points are a great trick to get customers to charge up their credit cards.
- Coupons for Store Credit Cards – These coupons for using store credit cards are incentives for their customers to charge, charge, charge! Make sure you think about the actual cost if you don’t pay off your credit card in full. That 20% off coupon is costing you a lot more than it is actually saving you.