3 Holiday Credit Card Mistakes To Avoid

In 2012 holiday shoppers are expected to spend an average of $750 on gifts, parties & decorations according to the National Retail Federation.  With over 50% of that spending being swiped on plastic here are 3 common mistakes to avoid.

Mistake #1: Maxing Your Credit Card LimitEvery credit card has a limit and ideally you want to keep your balance at or below 30% of that limit. This ratio of credit balance/credit limit is called your credit utilization rate and makes up about 1/3 of your credit score. Higher utilization rates lower your credit score so make sure you know the current balance and credit limits of all your cards before you decide which card to charge that pretty necklace to.

Mistake #2: Opening New Credit Cards for discountsAn extra 15% off that new suit might seem worth it just for giving up a few items of personal info. but be careful with opening too many new cards based on the entry freebies being offered. 10% of your credit score is determined by the number of inquiries made for your credit report which is done every time you apply for a new credit card. It’s also important to remember that any discount you get could be erased by higher interest rates if not paid off right away. Retail cards usually carry interest rates 20-25% APR vs. 10-13% APR for general use cards.

Mistake #3: Not Paying Bills On Time – So what, you’re late. You’ll just pay the late charge and call it a day, right? WRONG! Not only can you rack-up late fees but being late on a credit card payment can cause interest rates to jump from around 10% to over 30% in some cases. On-top of late fees and interest rate hikes you can negatively impact your credit. Payment history is about 1/3 of your credit score and a single late payment can drop your credit score (which ranges from 300-850) by over 100 points.

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