Black Friday officially launched the holiday shopping season, but for many consumers it was only the start of their spending. Charging too much on credit cards, though, can lead to financial trouble later if those cards can’t be paid when payment is due.
The National Foundation for Credit Counseling (NFCC) is cautioning consumers that overspending during the holidays can have consequences that impact them well into next year. “If there’s one time of the year when people shop with their heart, not their head, it’s the holiday season,” according to an NFCC spokesperson. Emotional spending can cause people to lose sight of common sense and might be “the tipping point that pushes people over the edge financially,” she said.
The NFCC offers consumers some advice to keep in mind as they pick out gifts:
- Carrying balances leads to higher interest charges. Buying something on sale is only a bargain if you don’t end up paying interest on the item down the road. Only buy things you can afford to pay for when the bill arrives.
- Racking up debt can prevent you from being approved for new lines of credit or loans. Keep an eye on your debt-to-credit ratio and don’t compromise your future by putting yourself in a position where you may have trouble borrowing money later.
- Buying things on credit means you’re committing your future paychecks to paying for yesterday’s purchases. Payday doesn’t feel very satisfying when you know your entire paycheck has already been spent.
- Charging too much can lead to late payments, missed payments, and maxed-out credit cards, all of which can lower your credit score. Applying for new lines of credit can ding your score further.
- Being in debt contributes to insomnia, marital problems, poor job performance, and lack of focus. Consider this potential when you pull out your plastic.
Sticking to a budget and not spending beyond your means will lead to a happier holiday season. In case of overspending, consult a consumer credit counseling agency like the NFCC or another accredited organization for help getting back on track.