Credit Score News, Tips & Advice
Website CertifiedPrivacy Protected

Americans Expected to Use Cards this Holiday

By Sally Maison
Published: Sunday, November 29th, 2009

More than half of all American consumers are expected to use their credit card this Holiday Season either to buy gifts at retail stores or purchase items online. But experts note that many Americans neglect their credit score during holidays, which gives them additional problems the next year.

Americans Expected to Use Cards this HolidaySpecialists say the most common pitfall that consumers make when getting to the counter is immediately signing up for in-store cards which offer very tempting discounts. While those 10 percent or 15 percent price cutoffs are can be really tempting, specialists say in-store cards could bring huge damage on a credit score.

The note that such cards are structured like subprime plastics which start with very low interests but could eventually go up to 24.9 percent. They also have very low limits, typically at $1,000. High interest fees could be very difficult to meet, experts warn. Additionally, creditors make an inquiry on a person’s account with the credit bureaus every time a card is being applied for, which can slightly decrease a credit score.

But experts advise consumers not to neglect small changes in their rating since a point could draw the difference between an excellent and an average borrower. They remind consumers that having a high credit score could save them hundreds and even thousands of dollars on interest fees as they apply for mortgage or auto loans.

Before going out to buy gifts, consumers are advised to check their most recent billing statements to know how much credit they have on their plastic. Specialists note that many banks have slashed down limits this year, even closing accounts without warning. Consumers who run over their limits will be charged with over-credit fees and penalty rates, which could mean serious trouble for their credit rating.
Experts say consumers who want to improve their credit score this holiday season must not use up more than 10 percent of their credit limit.

While it is good to use their cards wisely during the holidays, consumers are advised to pay in cash as much as possible. Experts remind them that purchases made through plastic are almost always more expensive than cash transactions. Even if they pay their balances on time, consumers are likely to spend on their cards more than they intend to because of finance charges and other fees.

Cardholders can easily improve their score this holiday, experts say, if they create a budget plan and use cash instead of credit when they shop for gifts. Experts also tell consumers that next year’s economy remains unpredictable so they are advised to save money in advance.

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.