Personal Finance and Investing

You don’t have to spend the better part of the new year stressing over bulging credit card balances and high interest rates!

Called “holiday hangover,” it is the time of the year that many consumers cringe when they open their credit card bills. Too much debt and not enough cash means that credit card balances go nowhere while interest rates and fees continue to mount.

This is the year that you can change this, though. Instead of digging yourself into debt this holiday season, change your attitude toward holiday spending and instead spend smart to save yourself from a “holiday hangover” in 2010.

How to Keep your Credit Card Spending in Check this Year:

• Understand retailers’ tricks and be prepared to reject them. It is not uncommon to be inundated with credit card offers every time you walk into your favorite retailer. Although these enticements can be tempting, keep in mind that most retailers charge much, much more in interest charges than major credit cards. The bottom line: you will likely end up spending more in interest charges with retail credit cards, regardless of whether you take advantage of a promotional rate.
• Take your credit card out of your wallet unless you make a planned purchase. Impulse spending is the weak spot of many consumers. You’re out and about when you notice something that you didn’t think you need, but now you can’t live without. Sound familiar? For most consumers, this type of spending is dangerous and all too common. Your best bet is to simply leave the credit card at home until you are ready to make a purchase.
• Make a budget and stick to it. If you do your homework and set a strict budget for all the people on your list you are far less likely to go overboard with purchases, and far less likely to charge up your credit cards.
• Determine your ability to pay off your debt before you make a purchase. If you want to make a credit card purchase, but you know you don’t have the money to pay it off in full next month, sit down and calculate the interest you will be paying. Often times, this bit of reality is enough to make you think twice about hefty purchases.
• Choose the best credit card and put away the rest. You don’t need to use all of your credit cards, and you really shouldn’t. Instead, take the time to compare the rates and terms on your credit cards and use only the card with the best terms and conditions.

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