Tuesday, December 7, 2010
Know the Ins and Outs of Shopping with Credit this Holiday SeasonCCCS of Greater Dallas Encourages Consumers to Know Their Limits and Shop Wisely
Dallas - December 7, 2010 - The National Retail Federation reported that almost 62 percent of holiday shoppers say the economy will impact their spending plans this year. With Christmas right around the corner, consumers with tightened budgets may be tempted to purchase items they can't afford using credit.
For those shoppers who plan to use credit cards, it is important to know the ins and outs of shopping with plastic this holiday season before you head to the stores.
"It is very important to review your credit accounts frequently to make sure your credit limit isn't being cut, or your interest rate isn't rising," said Todd Mark, vice president of education for Consumer Credit Counseling Service of Greater Dallas (CCCS of Greater Dallas). "We highly recommend that you never spend more than you can pay off in three months time, at the most. Know that if you aren't using your credit as you do cash - paying off the balance on time and in full at the end of the month - you could be facing a bigger bill with higher interest rates than last year."
CCCS of Greater Dallas shares the following five tips for consumers to shop wisely with credit this season:
1. Know before you go. Check your most-recent statement to find out your current credit limit, interest rate and balance before you begin shopping. If your credit limit has been lowered or your interest rate has been raised, you should have been notified in your statement.
2. Protect your credit score. Remember that a credit utilization ratio of more than 50 percent will damage your credit score and limit your access to future loans. Know what the ratio means in dollars on each individual card and your overall cumulative credit lines, and don't exceed that amount. You'll be upset if some toys your kids may not even play with a month from now ruin your ability to make a larger purchase in the future.
3. Avoid going over your limit. While some creditors will let you go somewhat over your limit, this is never a good idea. That creditor will also charge an over-the-limit fee and possibly raise your interest rate.
4. Don't open department store credit cards just for a discount. A store discount could be tempting when money is tight, but opening new credit when you don't need it (especially at department stores) will increase your total credit available, making you an even riskier borrower. If you are looking to open an additional credit line, make sure that decision is based on terms, interest rates and rewards programs, and not a 10 percent discount at the register.
5. Only charge what you can afford. Limit any charges to purchases you can easily pay off within three months. The longer you carry a balance, the more damage you do to your credit score and the more debt you build with compounding interest fees. Ideally, only charge what you can pay off on time and in full every month.
"Credit cards offer valuable protections, such as charge back rights, which come in handy during the gift giving season," Mark said. "However, if you are already burdened with debt or don't have the discipline to charge within your holiday budget, it may be best to use cash."
CCCS of Greater Dallas offers a collection of free webinars and seminars on holiday shopping and budgeting. To schedule a class at your location or attend one of their onsite free seminars, call 1-800-249-2227 or visit www.cccs.net.
About CCCS of Greater Dallas
Consumer Credit Counseling Service of Greater Dallas, Inc. is a nonprofit, community based credit counseling and debt management service. Established in 1974, CCCS of Greater Dallas and its affiliate offices provide financial education and counseling to consumers in-person, by phone, or Internet at more than 20 locations in four states. CCCS of Greater Dallas is a HUD-approved housing counseling multi-state organization and serves as one of seven counseling agencies supporting the 888-995-HOPE Hotline. The agency is also a member of the National Foundation for Credit Counseling (NFCC), the nation's largest and longest serving national non-profit credit counseling network. To learn more about CCCS of Greater Dallas' free seminars or the agency's services, visit www.cccs.net or become a fan of CCCS of Greater Dallas on Facebook to receive updates on agency events and offerings.