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How to Avoid the Unwanted Gift of Holiday Credit Card Interest

How to Avoid the Unwanted Gift of Holiday Credit Card Interest

The Average American consumer is planning to spend just over $1,000 this holiday season — and if they’re using credit cards to shop, chances are they’ll end up paying more for holiday cheer thanks to credit card interest.

A budget is a powerful financial tool at any time of the year, and building a solid budget can help you keep track of what you spend. Start by picking a number for your holiday budget — and then stick to it. Be extra mindful of last-minute, surprise expenses you’d otherwise forget, like host gifts for holiday parties and shipping for presents.

Too Much Holiday Spending Can Negatively Impact Credit

Holiday spending and high credit card bills can really impact your credit. If you max out your cards, you’ll not only be left paying more in interest, but it could also negatively impact your credit utilization ratio — the amount of credit you’re using versus your total available credit — which is a major factor in most credit scores. Credit utilization makes up 30% of a FICO® Score, one of the most commonly used credit scores among lenders.

If you do find yourself with a stack of credit card debt after the holidays, take proactive steps to pay it off as quickly as possible so that you can reduce the amount of credit card interest you pay and try to negate any impact on your credit scores. If you’re planning a big purchase, like buying a home, then you’ll want to make sure your credit is in great shape.

Make Additional Payments

If you are spending more over the holidays, you can potentially avoid paying credit card interest after ringing in the New Year by making additional payments before you even get those credit card bills. Put extra money or any cash gifts from family or friends towards your credit card payments instead of buying something else. While this might not be as fun as getting something new, it could make you feel much better in the long run to avoid larger credit card bills next month (or beyond).


Information provided does not necessarily represent the views of Mr. Cooper, and any use of third party names and trademarks does not imply endorsement. Information is subject to change without notice.

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