Raise your hand if you used your credit card over the holidays.
This year. Last year. Any year, really.
Chances are that hand is up and would be up for the last several years as the majority of shoppers tend to lean on their plastic during that time period.
What you tend to forget and where most of the money missteps happens are the months after the holidays. Of course, you know most consumers tend to find those after the holiday sales when you save 70 percent off Christmas decorations, for instance, or also the retailers and their propensity to discount clothing to clean off the shelves of their winter gear and start prepping for spring.
But beyond just the merchandise and buying, mistakes after the holidays tend to center on credit and credit cards. More specifically what you do with them, and how they’re used after they’ve, well, been used.
The two worst things you can do with a new line of credit actually reside on opposite ends of the spectrum, and that’s using it too much or closing it altogether. The latter is a natural reaction, particularly if you opened a card to save a certain percentage of a purchase and the really have no interest in using it again. That, of course, is understandable, but you’ll always have that “what if” moment, and closing cards actually allows your credit to take a hit just as much as a hard inquiry on your credit as well.
Typically, what you want to do with store credit cards is use them for the discount and pay them off completely, but not necessarily closing them, either. That said, you never want to forget about the new cards. Sometimes opening a card and letting it sit just means that the creditor eventually will close it on its own due to inactivity so make sure you use it once and a while, sporadically, and then pay it off right away. That element is a must for all store credit cards, too, since they typically care with them a 20 to 30 percent interest rate after the first month when you don’t pay in full.
Naturally, using it too much is the basis on which bad credit stories come to fruition. Every credit story that turns from good faith to a nightmare focuses on opening a card for something as simple as a balance transfer and then you end up maxing it out on things you can’t even remember.
Credit can come in handy but only when it is used correctly and not as a means to gain products, particularly ones that come during the holidays and especially the ones after that time period concludes.