Credit Card Do’s and Don’ts During the Holidays

Credit Card Do’s and Don'ts During the Holidays article image.

When used responsibly, credit cards can enhance your holiday shopping experience by providing rewards, introductory 0% APR promotions and even some protections for your purchases.

But it's important to watch out for potential pitfalls along the way, so you don't end up deep in debt. Here are some do's and don'ts to consider as the holiday shopping season gets underway.

Credit Card Do's for Holiday Spending

As you prepare to use credit cards to make your holiday purchases, here are some ways you can get the most value out of them.

Make the Most of Your Rewards

Some cards offer extra rewards earning on certain spending categories or even with certain retailers. Think about where you plan to spend most of your money on gifts and other holiday expenses, and check your current cards to see if any offer bonus rewards on those purchases.

If you're traveling during the holidays, booking flights and a hotel on a travel rewards card could help you build up points for a vacation next summer. If cash in hand is more up your alley, cash back cards can put some of your holiday cash back into your pocket.

You may also consider applying for a new credit card that better aligns with your spending than the ones you have now.

Get a Card With an Intro Bonus

Credit card companies love to encourage holiday spending by enticing you with generous rewards offers. Getting a new credit card with an intro bonus can be one way to rack up a lot of cash back, points or miles on purchases you're already planning to make.

Consider a Card With an 0% Intro APR Promotion

In an ideal world, you'd be able to pay off all of your holiday purchases by the end of the billing period so you don't end up paying interest. But if your finances are a bit tight, you may consider a card with a 0% intro APR promotion.

Some of these cards offer 12 months or more of no interest, allowing you to pay down your balance with no added charges. Just keep in mind that those payments will make it harder to save up for next year's holiday season, so don't go overboard.

Use a Credit Card to Track Your Holiday Budget

If you're trying to stick to a holiday budget, using your credit card for purchases can help. You'll be able to look up your transactions and track expenses without having to do any extra work. Tracking your expenses will also help you understand how much you'll need to save up for holiday purchases next year.

Pay Off Your Card as You Make Purchases

It's smart to make sure you don't let your card balance linger too long. If you can, pay off the entire bill as soon as possible after making purchases so that you're not paying interest or late fees on anything.

If your card has a low credit limit, you may even consider making multiple payments throughout the month to keep your credit utilization rate, or the percentage of your credit limit that you're using at a given time, as low as possible to help your credit score.

Protect Your Purchases With Extended Warranties and Purchase Protection

Some credit cards offer purchase protection and extended warranty coverage on certain items. For example, if an item has a manufacturer's warranty, your card may cover it beyond the expiration date. And if an item is stolen or damaged, purchase protection may help you replace it.

Just keep in mind that coverage varies widely based on the card. If you plan to make a large purchase and you want an extended warranty—or you simply want to use the card with the best purchase protections—read over your card details to make the best choice.

Use Virtual Credit Card Account Numbers When Shopping Online

If you're shopping online, your credit card information will likely be stored in the merchant's system, making it vulnerable to data breaches. To help protect yourself, try using virtual account numbers, which are temporary numbers tied to your existing card account.

Check with your card issuer to see if it offers this as a security option. If it does, you'll simply request a temporary account number, which will also come with an expiration date and security code, and use it to make online purchases. After you're done using it, you can disable it without messing with your primary account number.

Credit Card Don'ts for Holiday Spending

While using credit cards can enhance your holiday shopping experience, it's important to be cautious so you don't end up deep in debt or with damaged credit scores. Here are some examples of what not to do when making purchases this season.

Don't Spend More Than You Would if You Were Using Cash

One of the biggest dangers when using credit cards—especially during the holidays, when costs can add up quickly—is having a mindset that you can spend more than your finances actually allow.

If you normally wouldn't put so much on gifts, don't do it just because you're using plastic. You'll only end up with debt and potentially a damaged credit score if you go overboard. Ideally, you'll use your card and stay within your budget, then take cash you've saved up for holiday expenses and pay off your bills right away.

Don't Run Up Your Credit Card Balance

A high credit utilization ratio can hurt your credit score and make it more difficult to get approved for credit in the future. If you don't have the income to pay for all of your holiday purchases upfront, be careful not to let any balances linger on your card. Credit scoring companies consider your credit utilization on each individual card and also across all your cards.

Don't Forget to Pay Your Bill

Don't get too carried away with holiday shopping that you end up forgetting to pay your credit card bill. Missing a payment may not only result in interest charges but also a late fee.

And if you miss the payment by 30 days or more, it could damage your credit.

Don't Delay Repaying on a 0% Intro APR Credit Card

If you're using an introductory 0% APR credit card, don't forget to pay off the balance before the intro period runs out. If you don't, your interest rates will skyrocket, and you could lose all of those savings you were expecting when signing up for it in the first place.

Don't Lose Track of Your Spending

It's easy to get carried away shopping while on a spending spree at holiday parties or buying gifts online with free shipping offers. But if you aren't keeping track of how much you're spending, things can get out of hand quickly.

Make sure you're checking your online account often to know exactly where your money is going at all times, and consider creating a spreadsheet or even a simple list to track your holiday expenses.

Don't Enter Credit Card Information Online From a Public Wi-Fi Network

Public Wi-Fi networks are risky places to complete payment transactions, or provide any personal information at all. These networks carry the risk that someone could be snooping to access your information without your knowledge.

If you have to shop while on a public network, consider using a virtual private network to encrypt your connection to the internet.

Monitor Your Credit During the Holidays

The holidays are a busy time, making it prime time for identity thieves to take advantage of unsuspecting victims. Monitor your credit regularly to make sure there's no strange activity going on.

If you find a purchase or other action on one of your credit card accounts that you don't recognize, you can dispute it with the credit reporting agencies and freeze your credit to stop further fraud.

Experian's free credit monitoring tool can help you keep track of your FICO® Score and Experian credit report. You'll also get real-time alerts when changes are made to your credit report, so you'll know quickly if something is off.