With the Christmas holiday season approaching, now is the time to finalise your budget. The average Aussie family spends $1,479 on Christmas presents, food, eating out, and travel. This is up 10% year-over-year, and the pressure to spend has never been higher. With that being said, should you use your credit card for Christmas gifts this season?
While many automatically assume credit cards are bad news, there are actually some advantages to using credit on your Christmas spending. There are a lot of rewards to take advantage of particularly around this season, and you can even snag 0% interest in many cases. However, there’s no such thing as one-size-fits-all when it comes to the season of giving. In this guide, we’ll answer the question of whether you should use your credit card for Christmas gifts this season.
How to Make the Most of Credit Cards
First, if you’re preparing to use credit cards for Christmas gifts, you need to know how to take full advantage. Of course, you should always start with a holiday gift budget before the season begins. The more you prepare in advance, the less likely you’ll overspend.
With that in mind, here’s how to make the most of credit cards during this season:
- Look for a 0% intro card: The best way to make your cards work to your advantage is to seek out cards that offer a 0% interest rate promotion. If you’re able to pay this card in full before the end of the intro period, you’ll avoid paying any interest. Paying down the balance over time without any added fees or interest can be economically smart.
- Redeem rewards to offset your purchases: Another thing to consider is your credit card rewards. If you use credit for everyday spending, you likely already have quite a few reward points racked up. You can spend these on statement credits to lower your balance, travel arrangements, flights, and even gift cards.
- Use virtual card numbers: You don’t want to risk your data this close to Christmas. Take advantage of your credit card provider’s virtual account numbers when shopping online. These are temporary numbers tied to your existing cards, and they prevent your information from being leaked when you shop online.
- Protect yourself with warranties and purchase protection: Some providers offer extended warranties and purchase protection. If your gift is stolen, broken, or lost, you might be able to get it replaced at no cost. Of course, this depends on your particular card provider.
Check your current credit rating to see what types of card offers are right for you. If you’re in good financial standing and have a plan for your Christmas budget, credit cards might be the right choice to make the most of your holiday budget.
Credit Card Don’ts During Christmas
As you can see, there are a lot of legitimate reasons to take advantage of credit cards during Christmas. You might score big savings, rewards points, and discounts. Similarly, you’re purchases are usually more protected.
However, there are important credit card don’ts for holiday spending that are just as important to consider. Pay close attention to these things to avoid when shopping with credit cards this Christmas:
- Don’t spend more than you can afford: When swiping a credit card, it’s easy to spend more than you can afford. Remember, you don’t want to start your year with debt. Your credit utilisation rate going up could potentially lower your credit rating, and it’s easy to spiral into more debt.
- Don’t skip your payments: Missing a credit card payment is expensive. You could face a late fee, a higher interest rate, and a ding to your credit. Set a reminder or create a payment schedule to avoid any mistakes.
- Don’t lose your data: Another important reminder is to always protect your credit card information. If you’re shopping online, avoid public networks that could compromise your connection. In addition, avoid entering personal information anywhere it could be leaked.
At the end of the day, consider your own comfort level with credit and debt. If you know you’ll stick to your budget when it comes to spending, credit cards can be a valuable tool. On the other hand, if you’re likely to spend more than you can afford or you’re facing high-interest rates, use cash or debit instead.
There is no right way to prepare for the Christmas season. For many, this is the most expensive time of year. The more you can prepare and budget in advance, the better equipped you’ll be to make the most of your money. Remember, this holiday isn’t about giving the most expensive gifts. It’s about spending time with those you love and making memories — and this is completely free.
Do you need help with your Christmas budget? The team at Debt Busters are here to help. Contact us on 1300 368 322 to start your journey towards healthy spending habits.