Even a little Christmas gift-induced credit card debt will be a Grinch

We all want to buy presents for our loved ones, but take care when racking up credit card debt. The consequence of spending a little more money before Christmas might catch up with your credit score after New Year’s.

“It is probably more the norm than the exception that people take on additional credit card debt during the holidays,” Rod Griffin, senior director of consumer education and advocacy for Experian, told WTOP. “In some cases, people will make purchases for this season and still be paying that debt next year, which is really the worst case scenario.”

Even just missing a few hundred dollars of credit card payments from holiday purchases can have a huge impact on your credit scores and ultimately affect interest rates for loans, costing you thousands of dollars in the future.

Griffin said consumers are wary this year about credit card debt. A recent survey conducted by the credit monitoring group said a majority of respondents plan to pay for gifts using cash.

“They’re thinking about how to manage that debt and how to manage the costs that we see in the economy this year,” Griffin said about the pressure of high inflation in recent years.

If you are using a credit card and plan to pay it off entirely the next month, also be mindful of your credit balance.

“You don’t want your balances to be more than 30% of your credit limits,” Griffin said. “The goal isn’t to have a 30% balance on your on your credit card. It’s to stay as far below that as possible.”

Higher balances can drop scores by up to 40 points month over month. But paying them back in full the next pay period will often recover those point losses.

Griffin looks toward Santa as inspiration when it comes to holiday shopping. Make a budgeted shopping list and check it twice. And avoid impulse buying at all costs.

“Impulse buying during the holidays is what typically gets people into trouble,” he said.

Luke Lukert

Since joining WTOP Luke Lukert has held just about every job in the newsroom from producer to web writer and now he works as a full-time reporter. He is an avid fan of UGA football. Go Dawgs!

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