Holiday Credit Mistakes Can Impact Your Financial Future
With parties to attend, gifts to buy and sales advertised in every store window, the holidays can easily become a time of excess spending. Each year, Americans rack up millions of dollars in credit card debt in order to fulfill holiday expectations, only to find themselves filled with financial regret in the New Year. If you must use credit this holiday season, try to follow these two cardinal rules of good credit habits in order to preserve your credit score:
Don’t Open Store Credit Cards
Sure, you’re likely to get lots of perks for opening a store card around the holidays, but experts say having too many credit cards can be quite harmful on your credit report. Most importantly, each new account you open shortens the average age of your accounts. The older your average account age, the higher your credit score – and vice versa. Work toward a long trend of positive credit history by sticking to one credit card with perks you can use year round, rather than multiple store cards.
Pay More Than The Minimum Payment – Every Month
Paying down debt quickly is one of the best ways to achieve and maintain excellent credit. Paying the minimum payment may meet legal requirements and keep your accounts in good standing, but it also means you’ll take much longer to pay off a debt – and pay more in interest in the process. Work to put every dollar you can against credit card debt, paying above and beyond the minimum payment each month, and your credit score will reap the benefits over time.
Credit can be a useful financial instrument for the savvy consumer, and it’s common to use it from time to time. However, keep the above best practices in mind to be sure to keep your credit score healthy in the holiday season and beyond.
Image via Flickr/glenneuloth