Birmingham, Alabama (PressExposure) November 04, 2008 -- A recent survey by the National Retail Federation indicates that many people have already started their holiday shopping. The survey found that 40.2% of consumers started their shopping before Halloween. Consumers plan to spend an average of $832.26 on holiday-related shopping, up just 1.9% over last year's $816.69.
"Every year, we remind consumers that unless you pay off your balance every month, you should limit using credit cards for holiday purchases. Limiting credit loans for holiday shopping avoids inflating your debt in the new year. The credit crisis of 2008 has made this even more critical because creditors are closely watching spending and credit limits for every account," says Bill Hardekopf, CEO of LowCards.com. "Lenders who were once so aggressive with extending credit are now very sensitive to an increase in the amount that you borrow. An increase in your balance sends a warning to issuers that you are a higher credit risk. This can result in a lower credit score, a higher APR and a lower credit limit on your credit card account.
"Before you make your first holiday purchase, this is also the time to verify the credit limit on every credit card that you use. Issuers are protecting themselves by lowering credit limits. If you are unaware that yours has been lowered, you can unknowingly exceed your credit limit. This can cause problems such as a lower credit score and a significantly higher APR. If you exceed that limit twice in a rolling 12-month period, some issuers have the ability to take your APR up to the default rate which can be anywhere from 28% to 32%."
Here are some tips to prepare for holiday spending:
* Start saving now. Look at what you spent last year and try to save that amount in the next two months. If you spent $500, you can save $62.50 per week for the next eight weeks and afford everything you purchase, or apply that payment to your January credit card balance so you don't have to pay interest on your holiday spending. "Instead of eating out, take your lunch to work or eat more meals at home from now through December; save that money for Christmas purchases," says Hardekopf.
* Change your shopping habits now before you get into the spirit of the season. If you can't afford to pay off your credit card in November, then you can't afford to add a lot more to it. "It's Christmas" is not a good reason to put yourself deeper into debt. "If you are still paying for purchases from last Christmas, then you can't afford a lot of shopping this Christmas," says Hardekopf.
* If you must use a credit card loan to pay for Christmas, make sure you can pay it off by Easter.
* Pay attention to your credit limit. "If you are close to your limit in November, you could have problems by December. The punishment for going over your credit limit is no longer a simple fee. You will have to pay the $39 over-the-limit fee, and your APR is almost sure to increase," says Hardekopf. "If you add to your balance and your credit utilization goes much higher than 50%, you could hurt your credit score."
* If you are looking for a new credit card, this may be a good time to apply. If the card has a 0% intro rate for purchases for six or twelve months, you can use your card as a free loan for holiday spending. This is recommended only if you pay it off before the interest charges begin.
* If you really want to stick to your budget and avoid impulse spending, pay in cash. According to Dun and Bradstreet, people spend 12-18% more when using credit cards than when using cash.
"Many households are struggling financially with credit card debt and mortgage payments. This is the year to give yourself permission to have the Christmas that you can actually afford. Don't add to your financial stress by adding more debt for gifts that will be forgotten before the first credit card bill comes in January.
"It is critical to look at the effect of additional spending on your credit card if you have been carrying a balance. Say you charge another $1,000 for holiday purchases on your credit card with an interest rate of 15%, and you pay just $30 each month. It will will take 43 months to pay off Christmas 2008, and you will pay an additional $302 in interest," says Hardekopf.
Link to survey from National Retail Federation: [http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=590]
LowCards.com ( http://www.lowcards.com ) simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index ( [http://www.lowcards.com/CreditCardIndex.aspx] ) is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1260 credit cards offered in this country.
We are happy to help the media with an credit card related inquiries you may have. We are proud to have been involved in many major articles about credit cards. You may see our press clippings at http://www.lowcards.com/press/press.asp . Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years. Press Release Submission By PressReleasePoint