Credit Cards and the Holidays - How to Get Through Debt Free

The holidays are coming up, and that means big spending and high credit card debt for many Americans. If you want to enjoy the season, but are worried about paying for it all, here's some good news: you can get through December and be debt free. With a little planning, you can avoid high credit card bills in January. Here's how:

Make a List

Most of the overspending during the holiday season takes place when consumers hit the stores without a plan. So before you head out, write down what you need to buy. Also estimate how much each item will cost. Then decide whether you'll pay cash or use a credit card for your purchases. By having a plan, you'll be more likely to stick to your budget.

Use a Low Interest Rate Credit Card

Many consumers use a credit card to pay for some of their gifts and holiday d├ęcor. If you plan to use one, look through the cards that you already have. Check the interest rates on each credit card. Pick the one with the lowest interest rate for your shopping. If you're unable to pay off the balance right away, you'll save money in interest during the next months.

Consider Applying for a New Credit Card

If you don't have a credit card with a low interest rate, you might consider applying for a new one. Many credit cards come with an initial interest-free period. The 0% APR usually lasts for six to twelve months. You can make this feature work to your advantage. Use the card for your holiday shopping, and then set up a plan to pay off the balance during the interest-free timeframe.

Avoid Store Credit Cards

During the holiday season, many stores offer deals when you sign up for a new card. While this may seem like a good offer, you'll want to check the details before filling out an application. Store credit cards often include a high interest rate, and you could end up spending more in fees than you initially save. A smarter plan might be to pay with the credit card you have already picked out to use for your holiday purchases.

Plan for Next Year

The holidays only come once a year, but it's never too early to start planning for them. After this season ends, start thinking about next year and create a plan. You may want to set aside money each month in a special holiday fund. Another option would be to start shopping for gifts earlier in the year. If you spread out the costs over a few months, the holidays won't take such a hit on your budget.

Even if you've struggled with holiday credit card debt in the past, you can get through this season without racking up high balances. Start with a plan before you head out to the stores. If you do use a credit card, make sure you know how much you're spending and how you will pay it back. Avoid impulsive splurges, and you'll get through the holidays easily. Then you can start planning for next year. When December rolls around again, you'll be prepared.