How to Avoid Debt this Holiday Season
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The Holidays are right around the corner. Whether or not you have begun your Holiday shopping it is important to keep in mind the following advice to avoid overspending. Set aside some time to figure out how much money you can afford to spend before you head out to the stores. Make a list of gift ideas and do some research on the best prices through local sales advertisements and product comparison websites such as pricegrabber.com. After you make your list add up the total cost and make sure it is not over your budget. Carry the list with you during your shopping to ensure you stick to your list.
The best strategy is if you cannot afford to buy with cash, do not buy at all. MyVesta.org suggests that if you must use credit cards, carry two of them. Use one with a zero balance for purchases you will pay off in full when you receive the bill. Use the other, which is the lowest interest, for purchases you will pay off as soon as possible and leave all other cards at home.
Be proactive by contacting your credit card companies regarding deals. Tell them you need zero percent interest on purchases for six months or you will not use their card. Most companies will be willing to work with you.
If you take advantage of starting a department store credit card for the initial discount of ten or fifteen percent off your purchase, be aware of the high interest rates. Strive to pay off the entire balance when you receive your bill, or as soon as possible.
Be sure to pay your bill on time. Late payments can result in penalty fees and could automatically trigger an increase of up to fifteen percent in the credit card's rate. If you know you will not be able to pay your bill on time, contact the credit card company. They will usually allow you a grace period if you are up front with them. Make sure you do not exceed the card's credit limit or you will incur additional fees.
Finally, plan ahead by starting a holiday bank account. Set aside a little money from your paycheck each month so you will be ready for holiday season in 2006. Managing your money wisely will contribute to your peace of mind and enjoyment of the holidays.
Sources: http://www.debtsmart.com and http://credit.about.com