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Make the Nice List with Your Credit Card Use

It’s that time of year again. He’s making a list and checking it twice. Of course, we’re talking about the major credit bureaus! The holiday spending season begs the question: how to pay for all that joy?

It’s tempting to turn to plastic to help finance the holiday season. The average American plans to spend $812 on the holidays this year, more than most people have just sitting around or in their savings.

Santas-list

Let’s look at some “naughty” and “nice” ways to use your credit cards during the holidays.

Naughty: Financing gift-giving with credit

If you don’t have the money to finance your gift-giving, it’s tempting to pull out a credit card. People tend to overspend when using plastic: a recent study of consumer behavior shows shoppers using credit cards spend nearly 20% more.

Nice: Paying for holiday travel

If you’re traveling for the holidays, it’s prudent to pay for it using credit. Most major credit cards offer insurance for rental cars and extra cancellation policies for flights in case of last-minute changes. Using a credit card to make reservations at hotels and other book-ahead services also can prevent a hold on your account as a deposit.

Resist the impulse to take frivolous upgrades. Keeping a clear budget will enable you to pay off that credit card bill next month and avoid finance charges.

Naughty: Guilt spending

The holidays are full of messages that connect spending to caring. Advertisers encourage us to make emotional decisions, rather than spending what we can afford. Credit cards make this easier by letting you postpone paying for the gift.

Instead of telling someone you care with borrowed money, express your feelings with a thoughtful message and an affordable gift.

Nice: Spending rewards on holiday purchases

If you use a rewards card throughout the year, now is the time to cash in those points. Most card issuers offer discounts on two things everyone needs this time of year: travel and gift cards. Picking up gift cards this way can make last-minute gift-giving easier.

How do you manage your holiday spending? Are there secret tricks to keep those costs down or techniques you use to keep you within your budget? Let us know on Facebook or Twitter.