Avoid Black Friday Debt

  • An Ounce of Prevention

    Sharing food, gifts and good times with family members is what makes the holidays happy for many Americans, but lean spending habits don’t have to expand with your belly this winter. It's a particularly important lesson as Black Friday approaches. Credit counselors usually see a boost in business in late January and early February, when people are struggling to dig out of holiday debt, notes Gerri Detweiler of Credit.com, but you can avoid the headaches from post-holiday credit card bills. Here’s how. Photo Credit: Avenue G
    Credit vs. Debit
  • Credit vs. Debit

    Whether to use a debit card or a credit card for your holiday shopping really depends on what kind of shopper you are. Generally, credit cards might be preferable because you’re protected if it gets lost or stolen or you have a billing dispute, says Detweiler. “You don’t have the same protections with debit cards,” she notes. But if you tend to carry a balance on your credit cards and you have high interest rate, using a debit card might be a better idea. And as interest rates have risen, consumers have been catching on. Debit card use has outpaced credit card use and has continued to rise over the past year, Detweiler says. “Consumers are laying off on using credit and they’re being more careful.” Photo Credit: Andres Rueda
    Know Your Limit
  • Know Your Limit

    Before you leave home to go shopping, make sure you check your credit limit. Creditors aren’t required to give you advance notice before lowering your credit limit, so you could be at more of a risk of going over it than you might expect, warns Detweiler. Banks may not want to give credit card holders advance notice of a lowering credit limit for fear that risky customers might run up a high balance before the limit is cut, Detweiler explains. While companies might actually benefit from charging over-limit fees in those cases, banks may be more fearful of risky card holders, especially with looming new credit card rules that protect consumers. If you’re using a debit card, check your balance to avoid overdraft fees. Photo Credit: The Ritters
    Keep a Budget
  • Keep a Budget

    Shoppers all know this, but sometimes we just don’t stick by it: “You want to spend an amount that you can realistically afford,” Detweiler says. That may be a tough task however, since “a lot of times we don’t really plan out our holiday spending,” she says. When making holiday gift lists, we often write down names, but not how much we intend to spend for each person. The thought of putting a dollar amount next to a name may seem callous, but it’s especially important now to make smart spending choices. Setting a budget for your spending on presents “really can cut the stress around the holidays,” Detweiler says. Photo Credit: Kevindooley
    Travel Light
  • Travel Light

    “Avoid carrying a wallet full of plastic,” says Detweiler. “Otherwise it’s easy to lose track of how much you’ve spent.” You may want to stick with one or two cards. You can use one debit card for certain purchases, for instance, since you won’t have to pay interest, plus one credit card with a low interest rate if you’re going to pay the purchase off within a few months, or a rewards card if you plan on paying it off right away, Detweiler advises. Photo Credit: Mangpages
    Keep Track
  • Keep Track

    Keep track of your purchases to make sure that your spending doesn’t get out of hand. Detweiler suggests keeping a blank page from your check register to keep a running total of how much you’ve spent and who you’ve spent on. You should also keep your receipts or get gift receipts for returns or exchanges. Couples using joint bank accounts for gifts should be especially diligent during the holidays about keeping track of ATM withdrawals, debit card purchases and check purchases so that you don’t overdraft your account, Detweiler adds. Photo Credit: Hello Turkey Toe
    Be Realistic
  • Be Realistic

    Your budget should not be based on how much available credit you have on your credit card,” says Detweiler. “It should be based on how much you can realistically afford to spend without creating a debt hangover come January.” Photo Credit: alanxcleaver_2000
    Don’t Be Embarrassed
  • Don’t Be Embarrassed

    If you’re focused on cutting back on your holiday shopping, now is especially not the time to feel guilty about how much you’re not spending. “The good thing about this year as opposed to other years is it’s not as embarrassing” to spend less, notes Detweiler. “You can be more open about it than in the past.” In fact, your family members might actually be thinking the same thing themselves, so if you’re the first one to bring up setting dollar limits on gifts or not exchanging them at all this year, it could actually be a welcome conversation, Detweiler says. Photo Credit: Jayel Aheram
    Prevent Theft
  • Prevent Theft

    To avoid identity theft and fraudulent transactions that could tie up your funds, use a credit card instead of a debit card to make purchases if you’re shopping online. You'll have more protections in case of fraudulent charges and it'll be easier to dispute a charge, personal finance experts say. Also, visit online retailers that you know and trust and do some research on unfamiliar sites before placing an order. And definitely don’t shop from public or shared computers. Photo Credit: Don Hankins
    Focus on Experiences
  • Focus on Experiences

    Overall, the holidays may actually have more to do with experiences and memories than what gifts you buy and how much you spend. Detweiler says that at one of her recent holiday gatherings, each family member wrote down a memorable holiday moment and put it in a “memory jar.” When they read memories from years past, they all ended up being about experiences, family traditions and funny events and not at all about gifts that they received, she says. Photo Credit: Francesco Rachello
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