The holidays are meant to be a happy time, spent with family, friends and loves ones. We take time to go out and shop for the perfect gift to show our love and appreciation for all the important people in their lives. However, with the Christmas carols and dazzling lights, most people get swept away into shopping bliss, bringing out their credit card for holiday purchases that might be over budget. This can be a huge issue, especially if you are trying to manage your debt levels.
This year, before you even get into your car and head to the mall with shopping list in hand, take your credit card out of your wallet and leave it at home. While this may seem crazy to you and impossible to do, it is the smartest gift you will give yourself this holiday season.
During the holidays, you are inclined to spend more money than you actually have. Companies spend thousands of dollars in promotional and marketing campaigns to appeal to your emotions, trying to convince you that you need to purchase their products to have a great Christmas. Companies will also offer sales and promotions to encourage you to buy more than you originally planned. As a result, many of us end up spending more than we planned to.
Once you’ve racked up charges on your credit cards and Christmas is over, you are left with substantial credit card bills that could take you months to pay off in the new year. No one wants to start their new year with major credit card bills and debt, so the smartest thing to do this year is to create a budget for your holiday shopping.
Remember, you must create a realistic budget that you can afford without going into debt! Once you’ve decided on your budget, withdraw the exact amount of cash you need from your bank account. Use only that money for your shopping. With credit cards having substantial credit limits, most of the time the amount of money you are allowed to spend is well beyond what you can afford. If you go shopping with a budget in mind and no credit cards, then you won’t have any opportunity to spend more than you have.
Online shopping without a credit card
For those of you asking, “But how do I shop online without a credit card?”, the answer is simple. Many banks offer Visa Debit cards that allow you to buy things online the same way you use a credit card, but instead with a debt card. This means that when you make the purchase, the money gets taken directly out of your bank account immediately.
Another option is to use something like PayPal. With PayPal, you can top up your account ahead of time with the amount you have budgeted. Many vendors accept PayPal, so you shouldn’t have an issue. When you go to check out, instead of paying with a credit card, you can pay with the money in your PayPal account.
Be wary of identity theft this time of year
Something else to consider is that there is an increased risk of credit card fraud during the holidays. Credit card theft is heightened during the holidays because of the increased number of shoppers and a higher amount of money being spent. There is an increased chance that your card will be stolen and maxed out, causing you to be dealing with creditors all holiday season and into the new year.
So, to enjoy this Christmas, leave the credit card at home, spend the money you know you have, and ring in the new year debt-free!
Contact Credit Counselling Services of Atlantic Canada if you have any questions about creating a budget for the holidays and beyond.