Using Your Credit Card for Christmas Shopping?

Filed under: Credit Card Advice

Once again, the holidays are approaching!  In addition to dozens of sales circulars and catalogs filling your mailbox every day, you’re also getting those annual credit card offers?  And, they’re tempting, aren’t they? Should you use a credit card for your Christmas shopping?  Does it make good economic sense?  Believe it or not, it might just be the smartest move you could make this holiday season!

Here are a few of the reasons why you should use credit cards to do your Christmas shopping:

  • Online Shopping – Literally millions of people do their Christmas shopping online every year. With online pricing at places like Amazon.com competing for your business, it only makes sense to take advantage of the deals.  However, using your debit card, or writing a virtual check can put your bank account at risk, and expose you to serious financial problems.  While most banks will credit your account for fraudulent charges, it can take time, and effort to resolve these problems, and can damage your credit score in the process.  Credit cards, on the other hand, are much easier to cancel, and you’re only liable for a small fee, usually around $50, in the event your card number is stolen.
  • Carry Less Cash – If you’re one of those people who loves to crawl the malls and discount stores on black Friday, you’ll definitely understand how easy it can be to have your wallet stolen in the crush of shoppers! Doing all your holiday shopping using a single credit card can eliminate the opportunity to have your wallet (your cash and your identity) stolen!  At most, you’d only need to carry your credit card, and your driver’s license or other form of identification.  Think how much easier it will be to grab those bargains this coming black Friday!
  • Purchase Protection – Many credit cards offer you additional purchase protection, and even insurance, if the goods purchased with your card are lost, stolen, or damaged within a certain amount of time.   This additional protection can even extend will beyond the manufacturer’s warranty on an item.   Even if you lose the receipt, your credit card statement will vouch for the original purchase, and you’ll still be covered!  (This one’s especially good for those expensive toys that never seem to last past the new year.)
  • Cash Back (and other) Rewards Programs – What?  Cash back for shopping?  Yes.  Using a cash back reward credit card for your holiday shopping can be a really smart way to save!  In addition to getting those gifts on sale, you can get up to 5% cash back on qualified purchases, just for using the right credit card when you buy.  Provided you pay the card off when you get the bill, you could reap substantial rewards from this year’s holiday shopping season.

So you see, using your credit card for Christmas shopping can be very smart, if you do so wisely! But, it’s important to be as prudent with your credit card as you would be with using your cash to shop…keep track of your purchases, and make sure you stay within your budget.  That way, you won’t get that ugly January surprise when you receive the credit card bill.

Tags: ,

Are Balance Transfers Beneficial?

Filed under: Credit Card Advice 1 Comment

Credit card transfers are wonderful benefits, sometimes.  If you have received a credit card offer that is boasting being able to provide you with a very low introductory rate if you open a credit card and transfer the balance from another card to this one, look it over carefully.  There is no doubt that there are some real benefits here.  In fact, you may find that this is the perfect way to save yourself some money.  But, only when you read the facts will this become evident.

What Is It?

The first thing people want to know is just what is it.  What’s a balance transfer in the first place?  During a balance transfer, you will transfer the balance of one credit card to a new credit card.  Often, the new line of credit is offering a very low fee, interest payments or even zero percent interest during the first few months.  Their goal, of course, is to get you to pay interest over the course of the balance after that period. 

When you use a balance transfer, say from credit card A to credit card B, you are moving funds that may be under a hefty amount of fees or even those that are late, over the limit or offer a very large interest rate.  By doing this it can help you to come up for some air.

How To Save Money

But, moving money from one place to the next isn’t the best way to save money, is it?  With a balance transfer, you should consider several key things:

  • How long does the introductory interest rate being offered to you actually last?
  • Are there any balance transfer fees?
  • What is the new credit cards’ annual percentage rate after that introductory rate expires?  If it is higher than your currently paying, be careful.
  • Will cash advances, balance transfers and new purchases work with the introductory rate or is it limited?
  • How do other fees stack up to those that you are currently paying such as your annual fee, over the limit fees and late fees?

Now, consider how to make the most out of using balance transfer credit cards.  Your first order of business is to find out if in fact the potentially new credit card is one that offers you an interest rate that is lower than what you are currently paying.  Don’t look just at what you are paying during that intro period, but the actual annual percentage you will pay after that expires.  If that rate is lower, you’ll save money straight away.  If it is higher, you’ll have to make some consideration.

One thing to consider is how likely you are to pay off your debt within the introductory period.  Don’t exaggerate here, but be honest with yourself.  If you can’t pay it off, you will end up paying more for it in the long term.  If you can, then you are really going to save yourself money. 

Paying off your credit card debt while it is in a lower introductory rate or even a zero percent introductory rate period will definitely help you to save money as you won’t be paying any interest on the loan.  Working hard to do this can actually save you quite a bit of money.

But, Beware!

Not all credit card companies offering balance transfers are as honest and upfront as they could be.  Here are a few things you have to check out before considering.

  • Are there balance transfer fees, acceptance fees or other fees that will add to the cost?  Some banks will charge up to four percent in fees.
  • Is the introductory rate being offered the rate that you qualify for?  Some lenders approach you with the lowest rate they can offer, but this may not be the rate that you wind up getting, as you may not qualify for it.
  • What if you miss a payment or you do something that will cause your credit score to go up, will your interest rates jump, then, too?

When all of these things check out, you will find that balance transfer credit cards are a solid investment well worth tapping into.  If you are looking for a way to actual save money on your credit card payments, it is through this method, especially when you have the potential of paying off the credit line in the time of the introductory interest rate.

Tags: , , ,