Use credit, don’t let credit use you! Check out our top tips for avoiding a Christmas debt hangover
Did you know applications for credit increase in the three months before Christmas? Then they drop sharply in January as Kiwis feel the pinch of festive season spending.
Credit Simple CEO David Scognamiglio says that credit can be a useful way of managing the cost of Christmas, but stresses it’s important to use it wisely to avoid paying excess interest and potentially damaging your credit score.
“Christmas can be an expensive time and making use of credit can help consumers spread that cost and avoid overwhelming bills at once,” Mr Scognamiglio says. “However, it’s crucial to be smart about what you borrow, hunt for the best deal and make a solid plan to pay it off before you’re stung with interest and fees. Remember to use credit, don’t let credit use you.”
And with that, we’ve rounded up our tips to avoid a Christmas debt hangover:
Hunt for the best deal
If you do need to make use of credit, make sure you shop around for a deal that works best for your budget. Research interest-free periods, deferred payment options, and low account fees. Consider credit cards with a fair payment hierarchy that let you pay off high-interest balances first.
Limit credit applications
Only borrow what you need and don’t apply for several forms of credit. It’s easy to be tempted by store cards, credit cards and increases on existing loans, but each time you apply for credit it leaves a record on your credit file, dropping your score. Research the best form of credit for you and stick to just one or two. Remember that you can check your own credit score and credit history as many times as you like and it won’t affect your score.
Make a plan to pay it off
Interest-free and deferred payment deals are abundant at Christmas, and they’re one of the best ways to use credit – provided you pay it off before the interest kicks in. Make a plan to pay it off and stick to it.
You can find out your credit score for free and get more tips for managing smart credit right here on Credit Simple.
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