Every single year, millions of Americans struggle to make ends meet over the Holiday Seasons. Many of them go into debt to provide for their family and get gifts for loved ones. Did you know that the higher the balances on your credit cards, the lower your credit score will be? It’s true! It’s called the “Revolving Debt Ratio” and this ratio accounts for 30% of your overall FICO credit score, which is why you may see a drop in your credit over the Holidays.
The Revolving Debt Ratio compared your credit card balances to the respective credit limit. For example; If you have a credit card with a $10,000 credit limit and your balance is $8,000, your debt ratio on that card is 80%. Any time your ratio goes over 30%, your credit scores will go down. When you max out your credit cards, your credit score can have a devastating effect. So I’m going to give you some tips on how to avoid credit card debt over the Holidays…
How to Avoid Credit Card Debt Over The Holidays
1. Try Online Shopping This Year
We all know that online stores have lower prices, but here is something that not many people know… Most online purchases aren’t required to charge you sales tax (in WA state, that saves you 9.5%). Not only will you save a bunch of money by purchasing online, but you’ll get to avoid long lines and traffic (which saves you even more money & time). There are also some other tricks you can use to save more money when you shop online. I like to use Ebates, because they will give you cash back rewards at stores you’re already shopping at. Just the other day I got a $24 check from them for a few Ebay purchases. It’s not a ton of money, but it adds up!
2. If You Can’t Afford to Pay Cash, DO NOT Buy It
Try this, if you can’t afford to pay cash for the gift, then don’t buy it. There’s no reason that you need to go into debt to get a gift for someone, no matter how much you love them. Credit card debt is actually really scary, because it’s the interest is compounding, so if you make the minimum payments, it can take 30+ years to pay off.
3. Get Creative & Make Your Own Gifts
The best gifts I’ve ever received have been ones that were made just for me. It’s so easy to go out and buy a gift, but it’s not that easy to make one, so I cherish these gifts dearly. If you are like me, I’m really not creative at all, even when I give it my best effort. Thankfully, there are a bunch of great tools out there that will help you think of the perfect gift to make and will show you how to make it. I’m referring to Pinterest. This is one of the best places to start to get your creative juices flowing.
I hope this information was helpful and a few of you will avoid going into debt this year. The goal of this article is to help you think outside the box, keep you out of debt and keep your credit scores as high as possible. What if you decide that you want to buy a house or finance a car next month? Can you afford to have less than perfect credit just so you could buy gifts?
Bad Credit Resources
- Jesse’s FREE seminar in Seattle – December 5th 2015 “New Year, New Credit” – Seating is limited, you must be 100% confirmed here: http://CreditCEO.com
- You can schedule a free credit report audit & consultation with Jesse here: https://www.BetterCreditGuaranteed.com/
