A recent 2012 study by USAA of consumers' shopping expectations revealed that there will be less budgeting and more spending this holiday season. "In addition to the decrease in the number of shoppers cutting spending and budgeting, nearly half plan to use their credit cards to make holiday purchases," says J.J. Montanaro, a certified financial planner with USAA. And only a third of shoppers plan on paying off their card balances in full right away, he says.
With credit card purchases headed to rise into the holidays, here are six credit slip-ups to avoid this season, along with patch-up advice for the sadder and wiser shoppers among us.
Mistake No. 1: You now own a half-dozen retail credit cards.
Signing up for an in-store credit card to save 20 percent or even 30 percent on purchases that day is tempting. It's also trouble, says David C. Jones, president of the Association of Independent Consumer Counseling Agencies, a nonprofit trade group based in Fairfax, Va. Sign up for a new card too many times in too short a period, and it can hurt your credit. "And in a lot of cases the interest rates are ridiculous," Jones says. (A 2010 CreditCards.com survey said that nearly two-thirds of retail cards feature an APR of 23 percent or higher. Meanwhile, the annual interest rate on a new bank credit card is roughly 15 percent.)
Mistake No. 2: You're tempted by delayed-interest offers.
A popular offer this time of year is "no interest until 2014," especially on big-ticket items such as appliances and furniture. So even if you don't need a new California king mattress and storage headboard to go with it, you buy.
Mistake No. 3: You're spending more than you planned to.
So you walked out of the mall with twice as much stuff as you wanted or needed? No wonder: Retailers are geniuses at getting consumers to spend money. "Marketers know all about the psychology of spending," says Cicily Maton, founder of and financial planner at Aequus Wealth Management in Chicago. Everything from artful displays to that pile of fetchingly priced stuff at the cash wrap "is geared toward making us spend more money," she says. Her favorite crafty ploy: Buy-one-get-second-for-(however much)-off, which sends most consumers searching for a sweater or pair of socks they don't need, just for the discount. "And you're still spending half as much as you would anyway," Maton points out.
Mistake No. 4: You're a big bargain shopper.
Newspaper ads and in-store signs tout half off -- even 75 percent off -- tempting gifts and goodies, and urge consumers to "buy now, while supplies last." They're bargains, right? And as a good shopper, how can you resist?
Mistake No. 5: The bad guys got your credit card number.
The keep-it-close protectiveness you feel about your wallet or handbag can fade while shopping online. Yes, you're safe at home, but talented hackers can breach even secure sites. Less-than-trustworthy e-retailers can neglect to fully secure their websites. Scam artists double down on spear fishing -- sending innocent-looking links that, when clicked, download malware onto desktops. That malware records keystrokes and enables thieves to steal any and all data entered into that computer.
Mistake No. 6: You're spending money you don't have.
With mortgage and auto loan rates at record lows, credit card debt falling (it's dropped by about $171 billion since August 2008) and a slight rebound in the job market, it may be tempting to feel flush and spend accordingly. That might include tapping into the holiday bonus that might be coming this month or signing up for an extra credit card or two.
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