The holiday season is a wonderful time full of joy, cheer, and generosity. It’s a time for baking delicious goodies, spending time with family, and giving gifts. The holiday season is a time filled with cheer but, it’s also a time when people tend to spend a little too much on their credit cards. Especially with all the incredible deals going on, it’s often hard to pass on something because the price seems just right. There’s the mentality of, well I can just pay it off later, that’s what credit cards are for, right? However, some people tend to forget the true cost of credit cards when it comes to making a purchase. That “incredible deal” might not be quite as incredible once you’ve calculated the 20% interest you could pay. According to an article by Forbes, “put it on plastic, and it could cost you double.” So, you could end up spending just as much, if not more just by using a credit card, than if you waited to make a purchase outright. Even if you thought you were getting a good deal, throw it on plastic and it could end up costing you a lot more. An example of the potential cost from Forbes states, “According to the Federal Reserve, the average credit card interest rate is 13.93%. If you spend $1,000 this holiday season and only make the minimum due on a credit card with 13.93% interest rate, you will end up paying more than $350 interest. And if you used a store credit card with an interest rate of 24.5%, you could end up paying over $1000 of interest.” Suddenly, 50% off doesn’t sound like quite a deal once you end up paying double anyway. Sure, if you charge something at full price you’ll end up spending even more than if you charged something on sale but the point is, charging will cost more money regardless of how you look at it.
Credit issues are one of the main hindrances when it comes to securing a mortgage, we urge you to be careful this holiday season and make sure you spend within your means. It’s easy to give into the holiday spirit and want to charge up those credit cards. But, there are other ways to spread holiday spirit without maxing out your credit cards!