Keeping Your Credit Healthy After Holiday Spending
posted
on Wednesday, December 30, 2020
in
Education
It's easy to let your credit get out of control during the holiday season, focus on the facts to try and keep your credit score in the clear.
Holiday Spending - Good News
- 33% of people planned to spend less
- 9% of people planned to spend more than in 2019
Holiday Spending - Not Good News
- 57% of cardholders who are already in debt were willing to dig deeper into debt for the holidays
Credit Score Impact
1) Pay Your Bills On Time
When paying off your debt, try to pay more than the minimum on your card balance as soon as you can.
Let's say you have a credit card balance of $2,500 and 16% APR.
| Example 1 | example 2 | example 3 |
| Monthly Payment | $75 | $100 | $150 |
| Term to pay off | 45 months | 31 months | 19 months |
| Total Interest | $829 | $562 | $327 |
These scenarios show that the total interest drops as does the time to pay off your card as you incrementally increase your monthly payments. Pay off as much as you can, and make sure you pay on time!
2) Credit Usage
Try to stay in the 10% to 30% range by making multiple, smaller payments on your balance throughout the month. A high utilization ratio will lower your score.
3) Say No To Store Cards
Though it may be tempting, don't accept the offer to "save 20% if you open a store card right now!" Doing so will place a hard inquiry on your credit report which will cause a drop in score (on average 1% - 2%).
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