It's starting to smell like the holiday season already and this time of the year signals an increase in consumer spending particularly for those planning to host a family reunion or a small gathering of friends and other parties. It is also a time for heightened stress levels as pointed out by a recent study on consumer behavior.
Traditionally, consumers tend to spend a lot more than what they can afford to pay during this time of the year - and the favorite spending tool? You've guessed it - credit card. A lot of buyers and shoppers these days prefer carrying a credit card because it prevents the necessity of carrying around cash. Credit card is also convenient because many online retail stores require consumers to have a credit card before they can buy online.
Admittedly however, many people use their credit cards impulsively. Without a doubt, one of the worst mistakes that people tend to commit during the holiday spending season is use their credit cards without knowing the added costs that may be associated with using them. Now that the Credit Card Act of 2009 is in effect, it means higher upfront cost for most consumers and a more costly debt. Inorder to help consumers avoid the hassle of credit card debt in the future, here are a few tips.
1. Use a business credit card only when necessary. Small business owners typically use a business credit card to pay for purchases. However, with the new Credit Card law, business credit cards are not protected from rate hikes by credit card companies unlike personal credit cards where interest rate increases on existing balances are allowed only if the holder is 60 days delinquent. In effect, having a balance on a business credit card is risky and has to be avoided because interest rate can change without a notice.
2. Do not use a credit card abroad as much as possible. If your credit card was issued here in the United States, chances are your card has some sort of cross-border transaction fee associated with it. Using it in a foreign country to purchase goods and/or services can significantly increase your debt associated with the typically high exchange rate.
3. Avoid spending more than what you can afford to pay. This is probably one of the most common mistakes by credit card holders. The holiday season is notorious for injecting a spending mood into consumers but if people are not wise enough to control the urgency to spend, it can be dangerous and costly. The new Credit Card Law allows card holders to opt-out of certain changes in terms on their accounts, including opting-out of the ability to exceed credit limit. It is advisable to opt-out of clause in order to protect yourself from expensive fees and costly interest rates in the future.
4. Finally, pay your balance as soon you comfortably can. Most credit cards are associated with high interest rates and penalty charges but there are some credit card companies that offer 0% APR. If yours happen to have a high percentage APR, then paying off your debt as quickly as possible will save you some headache related to credit card finances. If however, you expect to carry a balance of at least a few months, spend as little as possible even if the urge to do so is phenomenal.
Nothing beats a wise and informed consumer. A credit card is a privilege and knowing how to use it wisely will save you a lot of hassle in the future.
Traditionally, consumers tend to spend a lot more than what they can afford to pay during this time of the year - and the favorite spending tool? You've guessed it - credit card. A lot of buyers and shoppers these days prefer carrying a credit card because it prevents the necessity of carrying around cash. Credit card is also convenient because many online retail stores require consumers to have a credit card before they can buy online.
Admittedly however, many people use their credit cards impulsively. Without a doubt, one of the worst mistakes that people tend to commit during the holiday spending season is use their credit cards without knowing the added costs that may be associated with using them. Now that the Credit Card Act of 2009 is in effect, it means higher upfront cost for most consumers and a more costly debt. Inorder to help consumers avoid the hassle of credit card debt in the future, here are a few tips.
1. Use a business credit card only when necessary. Small business owners typically use a business credit card to pay for purchases. However, with the new Credit Card law, business credit cards are not protected from rate hikes by credit card companies unlike personal credit cards where interest rate increases on existing balances are allowed only if the holder is 60 days delinquent. In effect, having a balance on a business credit card is risky and has to be avoided because interest rate can change without a notice.
2. Do not use a credit card abroad as much as possible. If your credit card was issued here in the United States, chances are your card has some sort of cross-border transaction fee associated with it. Using it in a foreign country to purchase goods and/or services can significantly increase your debt associated with the typically high exchange rate.
3. Avoid spending more than what you can afford to pay. This is probably one of the most common mistakes by credit card holders. The holiday season is notorious for injecting a spending mood into consumers but if people are not wise enough to control the urgency to spend, it can be dangerous and costly. The new Credit Card Law allows card holders to opt-out of certain changes in terms on their accounts, including opting-out of the ability to exceed credit limit. It is advisable to opt-out of clause in order to protect yourself from expensive fees and costly interest rates in the future.
4. Finally, pay your balance as soon you comfortably can. Most credit cards are associated with high interest rates and penalty charges but there are some credit card companies that offer 0% APR. If yours happen to have a high percentage APR, then paying off your debt as quickly as possible will save you some headache related to credit card finances. If however, you expect to carry a balance of at least a few months, spend as little as possible even if the urge to do so is phenomenal.
Nothing beats a wise and informed consumer. A credit card is a privilege and knowing how to use it wisely will save you a lot of hassle in the future.