Making Holiday Purchases with Cards Beneficial for Some

With it being the holiday season, I’ve read an awful lot lately about how to be smart while you’re doing your holiday shopping. Some of the advice I’ve seen has been a bit disturbing to me, though as much of it seems to imply that consumers are too dim-witted to be responsible about their spending and, as a result, should strictly be paying with cash only. These financial “advisers” seem to think that the only way to make sure people don’t fall into an inescapable debt trap is to make all of their purchases with cash and completely avoid credit cards entirely. But it’s my opinion that making holiday purchases exclusively with your credit cards can be beneficial, but only for certain people.

In my opinion, the best way to handle your holiday shopping is to start by creating a holiday budget and start setting money aside early (starting around the 4th of July would be my suggestion). Up to this point, I seem to be in agreement with all of the experts that advise steering clear of credit cards. It’s at this point, however, that I have a bit of a different viewpoint on how to approach holiday spending.

If you consider yourself to be a disciplined shopper that knows precisely how to get as much out of your spending as possible, you should certainly go ahead and make those holiday purchases with your credit card. Assuming that you’ve budgeted ahead of time, you know how much you can afford without overextending yourself. So long as you’re disciplined enough to stick to your budget, paying with your credit card won’t be a problem.

Central to the idea that paying with a credit card during the holidays is OK is the assumption that you’ll be paying down your card balance without paying any of those finance charges. Even if you don’t have a rewards credit card, the benefits of using this method makes sense for many reasons. First, most of the major card issuers provide purchase protection when paying with a credit card. Second, carrying cash while you’re shopping or writing checks just doesn’t seem to have the same appeal these days as it used to.

If you do in fact already have a rewards credit card, you’re already positioned to earn a noticeable amount of cash rebates or other rewards on your gift item card purchases.

Remember: The vital factor in truly benefiting from those rewards cards is being able to pay down your card balance without ever incurring any finance charges. Invariably, having to pay those finance charges will negate any benefit that you might gains from the rewards earned

In fact, you might be able to earn a few “bonus” gifts with the money you’ve earned back with your card. Admittedly, the rebates or rewards that you earn back might be modest, but they’d still be free, right?

Related Posts:

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• Keeping Holiday Spending Under Control - If you are like the average American, you’ll spend somewhere around $900 this holiday season on gifts. If you are like 1/3...
• Understanding the Many Pitfalls of Rewards Credit Cards - I’ve written a lot about the benefit of using rewards credit cards.  In a nutshell, they’re truly only beneficial to card holders who pay off...
• Jump on Those Holiday Bills - Now that the holidays are over, you might already be getting some of those credit card bills from your holiday gift purchases....

This entry was posted on Thursday, December 20th, 2007 at 5:13 pm and is filed under Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.