Holiday Shopping Could Hurt Your Credit Score

Photo (cc) by Massachusetts Office of Travel & Tourism

‘Tis the season to shop. If you’re like most Americans, you’ll be whipping out your credit card to pay for a number of gifts this holiday season without any concern for how that could affect your credit standing.

According to a new survey from TransUnion, 80 percent of consumers plan to charge at least some of their holiday purchases on credit cards. Yet a majority (60 percent) gives little thought to the potential credit risks associated with that spending.

TransUnion senior vice president Ken Chaplin said in a statement:

Detrimental effects to your score can be short-lived if holiday balances are paid off each month. It’s important to remember that carrying a balance month after month could have a negative effect on your credit standing.

The average American will spend $804 shopping this holiday season, according to the National Retail Federation.

Though 84 percent of survey respondents said they’re concerned about the affordability of this year’s gift list, only 4 in 10 consumers established a gift-giving budget, TransUnion said.

To wisely use your credit cards and help ensure your holiday spending doesn’t have a lasting impact on your credit standing, follow these tips:

  • New cards. It may be tempting to apply for a new store credit card during the holidays, especially when they come with special offers and discounts. But beware that your credit may take a short-term dip as a result.
  • Know your credit card info. Before you use your credit cards to holiday shop, make sure you know the interest rate and balance (if any) you owe, TransUnion said. Using more than 30 percent of your credit limit can raise your credit score.
  • Pay your balances. To avoid paying more in interest than you have to, pay off your credit card balances with the highest interest rates first.
  • Budget. Establish a gift budget before you shop, and stick to it.

Going overboard on holiday spending can have lasting effects on your finances. Is it worth it?

I overdid my Christmas shopping for my kids last year. I failed to make a gift list or budget, and I spent more than I intended. I won’t make the same mistake again. This year I’m tracking my purchases and spending, so I don’t go over my budget.

Money Talks News’ Stacy Johnson offers some tips to keep you from blowing your holiday budget in this video.

How do you typically pay for your holiday gift purchases? Share your comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Kitchen Gadgets That Make Healthy Cooking a Breeze
7 Kitchen Gadgets That Make Healthy Cooking a Breeze

These small appliances and cooking aids make healthy eating easy — and they’re all available on Amazon.

7 Effortless Ways to Make Extra Money
7 Effortless Ways to Make Extra Money

In the digital age, new ways of earning cash crop up all the time — and some require next to no effort on your part.

These 13 States Tax Social Security Income
These 13 States Tax Social Security Income

Uncle Sam is not the only one looking for a piece of your retirement income. Is your state on this list?

5 Tax Breaks That Retirees Often Overlook
5 Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

9 Free Things That Used to Cost Us Money
9 Free Things That Used to Cost Us Money

Not everything is getting more expensive.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

20 Amazon Purchases We Loved in 2020
20 Amazon Purchases We Loved in 2020

These practical products made everyday life a little easier last year — and will do so in the new year, too.

11 Huge Retirement Costs That Are Often Overlooked
11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

7 Tricks to Cleaning Your Bathroom Faster
7 Tricks to Cleaning Your Bathroom Faster

These tips can get your bathroom sparkling with little time and no elbow grease.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.