The winter holidays are always extremely busy, for sellers and customers alike. Most retailers offer large discounts during this period, in an attempt to determine as many people as possible to spend money on their products. However, this leads to individuals’ spending money that they already have in their accounts, as well as whatever they can borrow. In many cases, shoppers end up going into debt or reducing their credit rating, which has a considerable impact on how they manage their finances afterwards.
This having been said, there are ways to properly use the credit that is available to an individual to pay for all the winter holiday expenses, various creature comforts, and also have something left. However, this requires careful planning and a bit of discipline. Here is what you need to know:
- Decide on What Type of Credit You Want to Use
The first thing that you should do is decide on the type of credit that you will use during the holiday season. Ideally, you should look for a very flexible type of credit such as a line of credit or an online lending service that offers microloans. However, it is also possible to use credit cards, but you have to keep in mind that they have high interest rates and using them too often will lower your credit rating.
- Make a List of the Essential Monthly Expenses
The best way to make sure that you do not get into trouble, financially, is to make a list of all your monthly expenses, add everything up and deduct it from your budget. You should never touch this money, regardless of what offers or discounts, you come across. If possible, try to pay these expenses as quickly as possible so that you do not have to deal with the temptation of spending the money on other things.
- Consolidate Your Debt before the Holiday Season Starts
It is common practice for many individuals to take out loans or use other forms of credit during the holiday season. While this is not necessarily a bad thing, having an unfavourable financial file may prevent some people from accessing various forms of credit. If you have already taken out one or more loans and/or have to repay money to the bank, consider consolidating your debt to give your credit rating a boost. This will ensure that you can get a personal loan faster and that the interest rate for it will be lower.
- Use Alternatives to Credit Cards
You should only use your credit cards for small purchases or emergencies, even during the holiday season. However, if you find great deals on products that you want and do not have the cash to pay for it, consider using an alternate source of credit. There are several types of microloan online platforms and P2P lending services that offer great deals during this period. The main advantage of using them is the fact that they do not perform credit score checks and borrowing money will not affect your credit rating.
- Keep Your Credit Rating from Going Down
When it comes to the holiday season, most people tend to use up all of their credit to pay for products and services, without thinking of what they will do afterwards. This can cause irreparable damage to their credit rating and have a serious impact on their long-term financial status.
Try to not spend more than what you can repay in the following months and always make sure that you keep up with the monthly repayments. Some credit forms, such as credit cards should be paid faster than others to keep them from lowering your credit score.