The holiday season brings plenty of good cheer but it also brings the pressure to spend, spend, spend. During the 2016 holiday season, Americans shopped to the tune of more than $658 billion, according to the National Retail Federation.
Holiday Shopping Budget… or Not
A Credit Sesame poll conducted last year, in 2016, found that nearly 40% of shoppers create a budget for the holidays and stick to it but 32% don’t set a budget at all. Another 20% said they do set a budget but they routinely spend more than they planned.
It’s never too soon to start working on your travel or shopping plans. Nobody likes to wake up with a holiday debt hangover in January because you overspent. If you want to keep your budget in check, now’s a good time to look for ways to save. Credit Sesame can be a helpful resource for protecting your wallet during the holidays.
Start with Saving on Your Existing Credit Card Debt
If you went on a holiday credit binge last year (or earlier) and some of that debt is still hanging around, give yourself a true, monetary gift: make that debt less costly.
Transfer your high interest credit card balances to a card with a lower annual percentage rate. Log in to Credit Sesame’s member area to look at introductory Annual Percentage Rate (APR) balance transfer credit card offers from our partners that we match to your credit profile and might meet your needs.
You’ll also be able to see your existing credit accounts, balances and interest rates. If you want to transfer your balances to a new credit card, your member dashboard can show you how to get started.
Compare interest rates, the length of each promotional introductory APR period, balance transfer fees and other perks like a cash back or travel rewards program. Once you find a card you like, you can easily click to apply.
Why Transfer a Balance?
A balance transfer can save you money if the new card has a lower interest rate than what you currently pay. There’s a huge difference between 0 percent and 15 or 18 percent. Depending on the size of your balance and the rate, you might be paying triple-digit interest every month. Take a look:
Wow! A $196 minimum payment and more than half goes to the interest charges for the month! You could save money on interest charges with a zero percent introductory Annual Percentage Rate (APR) balance transfer, and in doing so you can pay off your balance faster.
Balance Transfer Wisdom
Watch out for the balance transfer fee. This fee, which is usually between 3% and 5% of each balance transfer amount, or a minimum of $5 or $10, is added to the new card’s balance when the transfer is complete. For maximum savings as the holidays approach, be on the lookout for a card with a $0 introductory balance transfer fee (most offers will impose a fee). Note that offers with a $0 introductory balance transfer fee require the balance transfers to be completed within a certain number of days or months after you open the account, after which the fee for future balance transfers will then be the ongoing balance transfer fee which can be, for example, between 3% and 5% of each balance transfer amount, or a minimum of $5 or $10.
Score Savings on Holiday Travel
If your holiday plans involve travel, consider using a travel rewards credit card to book your trip and free up more cash that you can add to savings. For example, certain credit cards offer higher rewards for travel purchases.
Depending on the card, you may be able to redeem your miles or points for a statement credit for a trip you’ve already booked, or apply them to a trip you want to take. Either way, you’re spending less out of your own pocket when you use your rewards to pay some or all of your travel costs.
Keep in mind that every travel credit card offers a different menu of rewards, benefits and costs.
For example, does the card allow you to transfer your points or miles to airline or hotel programs of your choice? Is the transfer on a one-to-one basis? Know that redemption values may vary based on how you choose to use your rewards.
Also consider the card’s annual fee. The annual fee can be recovered in many ways – by earning and redeeming points or miles, by taking advantage of benefits like private club entry, or by qualifying for some other card benefit like a travel statement credit. Evaluate the cost in light of the benefits to determine whether the annual fee will provide value to you.
The Annual Percentage Rate (APR) for purchases is important, but only if you carry a balance on the card. Even consumers who pay off their cards regularly may sometimes need more time to pay. Credit cards with generous rewards do not tend to lead the market on low APR. Be aware of what the rate is on the card you use and how much you’ll pay if you have to carry a balance.
Look at any additional cardholder benefits you might take advantage of over the holidays. For example, free checked bags or companion discounts. If you plan to travel outside the U.S., carry a credit card that doesn’t charge a foreign transaction fee. Every extra penny you can save counts if you’re trying to keep your travel plans under budget.
Save When You Shop
Gifts for everyone on your list can get expensive but the right credit card can make the cost more manageable. A cash back rewards card, for example, allows you to earn cash back on your purchases, and based on the particular credit card you use you may be able to apply rewards earned as a statement credit or have your rewards deposited into your bank account.
A great perk of rewards cards for holiday shopping are the online shopping portals that some credit card issuers offer. If you don’t want to brave the crowds on Black Friday, you can browse deals through your card’s online mall to find discounts on gifts.
If you haven’t signed up for a free Credit Sesame account yet, it’s not too late to get a jump on your holiday planning. It takes just a minute or two to get your account set up and check out credit cards from our partners and you may find a potentially money-saving low introductory APR balance transfer offer, or travel, or cash back rewards credit cards.