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Planning your financial future

More rewards and savings this holiday season

If you plan to make charges on one or more of your accounts during the holidays, here are some super smart tips to keep in mind.

Shop smarter this holiday season with these four credit card tips.

#1: Apply for a card that offers zero percent interest.

Around the holidays, many credit card companies offer interest-free promotional financing, hoping that you'll do business with them versus their competitors. For this reason, they're willing to forgo a few months' worth of interest in order to earn your business. Opening a single, credit card account with an interest-free period during the holidays can be a strategic move when managed correctly. 

For example, say you have a budget of $500. If you think it will take you up to six months to pay off your holiday debt, then consider looking for a credit card that offers a zero percent annual percentage rate (APR) for at least the next six months. This gives you more spending power now, when you need it, and six months to make manageable monthly payments  with no interest! However, for this to work to your advantage, you must stick to your budget and make a commitment to wipe out the balance within that zero percent APR time frame. Also, read the application's fine print. The last thing you want is to be charged a fee (one-time or annual) just for the privilege of using the account.  

#2: Apply for a credit card that pays you back.

Many credit cards today offer a variety of immediate cash-back bonus rewards. Depending on the type of card you have, every time you make a purchase, you may receive reward points that can be redeemed for gift cards, cash, or even be applied to your credit card's payment. Some companies will even pay you cash back once you've charged up to a certain limit. When managed responsibly, these cash-back rewards can be an easy way to get some extra earning power during the holidays  and beyond. 

When comparing these types of credit cards, it pays to do your homework. The last thing you want is a card that pays you back on certain types of purchases that you rarely make. Typically, cash-back cards have their own categories of where you'll get paid back the most. To make it worth your while, look for a card that either pays you back on each and every purchase you make, or that closely matches your individual spending habits. A good rule of thumb is to maximize your rewards, but don't overspend just to get them. And remember to check for any annual fees before deciding on a cash-back credit card.

#3: Use “store cards” for introductory discounts, but use them wisely.

Have you ever gone into one of your favorite stores and were offered a one-time discount that could save you hundreds of dollars on your purchase? During the holidays, you'll find more of your favorite merchants offering you a line of credit in exchange for a seriously deep discount on your purchase. These can be huge, but you'll need to calculate the benefits and again, manage the account responsibly.    

For example, if a favorite retailer offers an introductory 35 percent discount on a $500 purchase, that's an instant $150 savings. It gets even sweeter if the merchandise you bought was on sale. What you need to know is that often, store specific credit cards come with very high interest rates. If you don't plan on paying the balance in full when your new statement arrives, you might just cancel out that upfront discount you received. Make sure it's worth your while and plan on zeroing out your balance as soon as the bill arrives.                 

#4: Use your credit card for all online purchases.

Today, many of us will do the majority of our holiday shopping online. But while it's convenient, it can also make you a target for fraud. If we can leave you with one solid tip when shopping online, it's to consider using a credit card - not your debit card. 

The fact is, your debit card is a direct link to your bank account. If a fraudster can manage to make one online payment using your debit card number, chances are they'll keep going until there isn't any money left. Most financial institutions are well equipped to handle these crimes, but while reports are being filed and an investigation into the crime is conducted, you could be out that cash. 

Fortunately, most credit card companies offer zero liability when it comes to fraud. By using a credit card, you'll have a greater degree of protection against fraudsters, they won't have access to your bank accounts, and you likely won't be out any money for fraudulent purchases. During the holidays, that's a definite plus. 

Here are some additional holiday credit card tips:

  • Before committing to a new a credit card, know the terms.
  • Track your spending so you don't go over budget.
  • Avoid a tempting “cash advance” from your credit card, as interest rates and fees can be steep.
  • If you've gone over budget on a high interest rate card, consider a balance transfer over to a lower interest credit card once the holiday season is over.
  • Finally, in addition to smart ways to use credit cards, it's important to mention that many financial institutions also run a variety of money-saving promotions during the holidays that can put even more spending power in your pocket. Whether you belong to a bank or credit union, be sure to keep your eyes peeled for:
    • Cash incentives and/or bonus cash-back points for opening up a new checking or savings account, or for signing up for services such as online bill pay. 
    • Offers to skip a payment in December on any loans that you may currently have with your lender.
    • Black Friday/Cyber Monday promotions that offer discount rates on pre-paid gift cards or incredibly low interest rates on auto or other personal loans and lines of credit during these limited sales dates.

You can read more about how credit cards work, as well as holiday savings tips on the Protective Learning Center.



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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