Holidays
Gift could wrap shoppers up in debt
Your diet is not the only thing in danger during the holiday season. So is your credit score. This time of year is the perfect time to wreck your credit worthiness. By shopping until you drop, you can max out your credit cards and carry bigger balances into the new year. And you might find it tempting to open new accounts to take advantage of store discounts.
All of these can hurt your credit score, making it harder for you to qualify for the best interest rates on mortgages and car loans and to open new lines of credit. A poor score also can hurt your chances of landing a rental apartment or even a job. The average consumer will spend $791.10 this season, up 7.2 percent from a year ago, according to the National Retail Federation annual forecast.
As debt levels rise, more people are concerned about carrying such burdens. For instance, one-third of people are worried about paying off holiday purchases this year, up from one-quarter a year ago, according to a survey from the Consumer Federation of America and the Credit Union National Association.
So how do you keep holiday spending under control? Make a budget and check it twice before heading into the stores. Decide how much you can afford to spend and stick to it. Pay with cash or a debit card, if you can. About 46 percent of consumers are still paying off debt from last year's holiday season, according to a recent survey by Consolidated Credit Counseling Services.
Refrain from special offers, including opening accounts to get a discount. Multiple credit cards often lower your credit score. Also, beware of offers of zero-payment in December. They'll leave you with a hefty bill in January, with additional interest.
Often, people think they can handle the increased debt until something unexpected occurs, said Gary Herman, president of Consolidated Credit. "You are carrying a big balance into the New Year and then something happens that causes you to miss a payment," he said.
