How to get your finances ready for the holidays
Now that school is back in session and autumn is almost officially here, many of us are starting to form a game plan as to how we will spend this holiday season. Whether you're a budgeteer, a sporadic shopper or someone who doesn't strategize too much for the holidays, making sure you're in touch with your finances before the holiday season kicks off can not only help you get through the season, but also allow you to make the most of your holiday shopping. Here are a few ways to get your finances ready for the holiday season.
Check your credit reports and scores
Checking your credit reports and scores is the easiest way to get an idea of what your financial health looks like. Regardless of the financial moves you plan to make this holiday season, you should have a general understanding of what your credit reports and scores look like, as they are always changing.
This is something you'll especially want to do if you plan to apply for a credit card or loan during the holiday season, or if you intend to use any credit cards, as all of these financial actions will impact your reports and scores. In addition, if you spot any errors on your credit reports, you can dispute them and hopefully get them removed by the end of the year -- starting your 2017 on a great financial foot.
It's easy to get a copy of your credit reports because you are legally eligible to claim a copy of all three of your credit reports (Equifax, TransUnion and Experian) through AnnualCreditReport.com. On the other hand, credit scores are not currently offered for free through AnnualCreditReport.com. This means if you wish to check your credit scores, you'll either have to pay a small fee per credit score or get them elsewhere.
While some credit cards provide you with one of your scores for free, only checking one score isn't that helpful because, like your credit reports, your credit scores are not the same across the board. That's where a credit monitoring service comes in. Most of these services provide you with all three of your credit reports and scores immediately after signup as well as actively alert you of changes that appear on your credit reports, and a handful of credit monitoring services offer free trials, which means you can test out the service before making any financial commitment. Read our credit monitoring reviews to learn more.
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Pay down existing balances
With about a month or so before the holidays kick into full swing, you have plenty of time to take care of (or strategize for) any credit card balances you've been carrying.
If you're unable to pay down your balances before you dig into holiday shopping, you may want to consider completing a balance transfer. By transferring your balance to a credit card that offers a long 0% intro APR on balance transfers, you are escaping the interest you're paying on your current credit card and saving a lot of money in the process.
Although you will likely have to pay a balance transfer fee of 3% or 5% of the total, that one-time fee is likely a lot less than the interest you're paying on your current credit card. Those looking to escape the balance transfer fee should consider Chase Slate, which offers a 15-month 0% intro APR on purchases and balance transfers and has a $0 intro balance transfer fee for transfers completed in the first 60 days of account opening, saving you 5% of the total -- the fee you'll have to pay after the intro period expires.
Not sure a balance transfer is the best solution for you? Enter your balance, monthly payment and credit rating into our free Balance Transfer Calculator to see which balance transfer credit cards will save you the most. It should be noted that if you're carrying a heavier credit card balance, a personal loan may be a better option for you. Read this blog post to learn more.
Make a budget
Let's face it: we all wish we could just go into a store and buy limitless gifts, decorations and other seasonal items, but that's not fiscally responsible for most of us. The key to having a financially-successful holiday season is to make a budget and stick to it.
Take a look at who you want to purchase gifts for, set a maximum you'd prefer to spend for each person and stick to it. If you shop at multiple stores, you may need to pull out your smartphone's calculator every now and then to see where you're at, but it will be worth knowing that you're sticking to the budget you set.
This rule also applies to other holiday-related expenses like holiday dinners and decorations. It should also be noted that you'll want to give yourself a little wiggle room, as some things may cost more than you expect and you don't want to be blindsided by an unexpectedly expensive ingredient or decoration.
Know how you're going to pay
When it comes to paying for your purchases, you'll want to make sure you pick the safest and best option for you. While you may be tempted to use your debit card, you'll want to understand that it's safer to use a credit card.
Credit card holders also get some added perks during the holiday season. For example, cash back credit cards with rotating categories, like Chase Freedom - $150 Bonus or Discover it - Cashback Match, gear their cash back rewards to holiday shopping, which means you can get rewards on purchases you're already budgeting for and planning to make.
Similarly, most cash back credit cards, including the two we mentioned, offer long 0% intro APRs on purchases, which means you can use the card now and pay your purchases off over time -- something you can consider when budgeting. Just be sure to pay off the balance before the 0% intro APR expires so you can avoid paying interest on your holiday purchases.
Holiday travelers may also want to look into travel rewards credit cards, as using the card pay for your holiday travel plans will help you earn rewards that you can redeem for a trip you may be planning to take in the future.
Consider identity theft protection
If you're planning on doing any shopping this holiday season, it's worth considering a subscription to an identity theft protection service.
The holiday season is a hotbed for scammers who know it's the perfect time to slip through the cracks and take advantage of a stressed out, festive shopper, and if you're one of the lucky not targeted by scammers, it's very likely that you may fall victim of a data breach, like the Target mega breach of 2013.
That's where an identity theft protection service can help. Not only can identity theft protection help provide daily monitoring of the information most often stolen during the holidays, including your credit or debit card numbers, name and other personal information, but some of these services also provide you with full access to your credit reports and scores.
What's more, all of the top-rated services we review offer free trials, which means you can try them out now for free and determine if it's something you'll want to continue during the holiday season.
Follow our personal finance blog to learn more about how to stay on top of your finances during the holiday season and year-round.
Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.
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