It’s no secret that holiday expenditures such as travel, food, parties, decorations, and gifts are important elements of our memories. People spend more money to make holidays memorable for themselves and their loved ones. In fact, retail sales in the US rose to 7.6 percent in the past holiday season, according to a Mastercard SpendingPulse survey.
But unplanned and unnecessary expenses can lead you to a debt trap. It’s because your impulse control may vanish when you are in the holiday spirit.
So, what are the holiday debt traps you need to avoid? Read on to find out.
Impulse Spending
Figuring out the actual monthly expenses is quite daunting for many. You may make a purchase on your credit card, thinking that the items come for free. It’s even tricky to isolate short-term needs and wants from long-term ones.
But the secret to fighting impulse spending is establishing healthy financial habits. Without impulse control over your finances, you make unnecessary purchases.
And these expenses tend to accumulate interest over time.
So, if you are a victim of impulse spending, carefully monitor your expenses and seek help from Freedom Debt solutions. Look at the items that take a large portion of your finances and determine whether they are worth the cost. You should also build a sustainable budget that considers your account balance and monthly expenses.
Falling for Costly Perks Without Thinking Twice
While the perks cards offer are attractive, they often come at a high cost. The excitement you may have when signing up for them may prevent you from reading the fine print. And at the end, your card may rack up high-interest fees.
It’s tempting to open several cards to enjoy the perks. You may also decide to open multiple cards to split the debt and extend your limits. However, each of these choices has consequences.
Instead of doing this, only accept perks that have favorable terms and conditions. And if making monthly minimum payments is a struggle, reach out to Freedom Debt Relief. Also, spreading your debt over multiple cards won’t help fix your debt problem.
Turning Credit Cards into Gift Cards or ATM CardsÂ
Most credit card providers allow customers to write checks against their credit limits. They also make it possible to withdraw money from an ATM, provided you are within the limit on your card.
While using your credit card as an ATM or gift card is convenient, you risk accumulating high transaction fees. For every translation, the credit card provider will bill you a certain fee. And by the due date, they expect to pay the amount owed plus interest.
The best way to go about this problem is to use balance transfers if you can comfortably settle the debt transferred before the expiration of the offer on the new card. With this strategy, you can debt from a higher-interest card to a lower-interest one, decreasing the amount owed. Freedom Debt solutions can also come in handy when dealing with this problem.
Overdraft Facilities
Turning to an overdraft facility is a good idea if you want to pay for an urgent expense when you have insufficient finances in your account. It’s because overdrafts take the form of short-term or emergency credit.
The flexibility that comes with overdrafts is double-edged. In other words, they may help you get out of an emergency but sink you deeper into debt.
So, before taking one, read and understand the terms and conditions. You should also pay them off quickly to prevent high overdraft fees. And if you need expert credit card debt help, make Freedom Debt solutions your go-to resource.
Summing up
Though the festivities bring plenty of memorable experiences, they attract considerable expenses. As a consumer, it’s easy to accumulate more debt during the holidays to keep up with the so-called ‘holiday spirit.’ As you give gifts to loved ones or make purchases at this time of the year, make a detailed plan for your expenses and learn about the holiday shopping debt traps you need to avoid.
