Financial Future

Consider FICO score before closing that credit card account
Closing a credit card account, while emotionally satisfying, could hurt your credit score.

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Part of the enjoyment of christmas is searching out the right gift for each person on your list. However if you extend your finances beyond their limits, your holiday shopping sprees can come back to plague you later. With some very simple measures, it may be easier to limit what you spend and still find great gifts. Better to do it now than be asking how do I fix my credit in January.

Many people tend to spend a little more when they shop using credit-cards. Keep these things in mind before you take out the plastic this holiday season:

* You could wind up paying more for your gift. If the charged balance is not paid, finance expenses will add extra costs to the original purchase price.

* Spending too much or maxing out your charge cards on gifts could unfavorably impact your credit. High outstanding credit card debt accounts for nearly 30 percent of your credit rating.

* Discounts can cost you your credit score. Prior to deciding to accept a discount on your purchase for signing-up for a store credit card, remember that just making an application for new accounts may negatively affect your credit rating.

To protect yourself from having to use credit for Christman gift purchases, begin saving as early as possible. Mentally tab certain funds as “off limits” for anything other than gift purchases – or even put away funds in a savings account that you know you won’t touch until shopping time arrives. When you’re ready to hit the store (or the Web), you can set yourself on the road to sensible spending by limiting yourself to a list and setting a budget. Both will help you stay focused on who you’re buying gifts for and how much you planned to spend. If you must use your charge card, only charge what you are able to afford to repay.

If you do make some missteps, however, there are smarter ways to get your finances on the right path after the holidays. Stick with these steps to get rid of debt faster:

* Don’t pay no heed to your bills. Putting things off might seem like the easiest route to take when you’re feeling overwhelmed, but it’s important not to fall into the procrastination trap. If you let your bills slip past the due date, your rates of interest might increase, you could incur late fees and late payments will be reported to credit rating agencies.

* Get wiser about paying off your credit card debt. If your holiday purchases spanned multiple cards, you ought to come up with a plan to pay off the debt quickly and most efficiently. To help get you started, consider financial products such as the Suze Orman FICO Kit, which will help you prioritize your debts in order to pay them off sooner.

* Go beyond the lowest required payment due. The more money paid toward the balances, the faster you can reduce your debt level. Or, better still, pay the total amount in full to limit the amount of interest you must pay each month.

It’s easy to get caught in the generous spirit of the season, but none of your gift beneficiaries would like you to get into debt on their account. Beginning your holiday shopping with some easy-to-follow spending guide-lines is the ideal way to approach the gift-giving season – and coming out of it debt free will certainly feel like a surprise gift to yourself.

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