Buy your sweetie's holiday gift without getting a credit hangover
You can't put a price on love, but many of us spend a lot during the holidays to make our loved ones feel special.
A recent survey by NerdWallet and TransUnion found that Americans who are currently in a relationship plan to spend an average of $338 on their significant other this holiday season. They're willing to put $200 of that on a credit card.
Presenting your better half with the perfect gift may be thrilling. But the feeling will probably wear off if your payment due date is looming and you realize you've overspent.
This doesn't have to happen to you. Here's how to head off a holiday-spending hangover.
Learn about your credit score to keep yourself in check
NerdWallet's survey found that nearly 1 in 3 Americans have used a credit card to buy a gift for their significant other that they could not pay off immediately. If you carry balances that are high in relation to your credit limit, your credit score may fall. That could mean higher interest rates not only on your card, but also on mortgages, auto loans and most other lines of credit.
Simply knowing how credit scoring works can help you make better decisions that could boost your score, and ultimately save you money. You can use NerdWallet's Where Do I Stand tool to learn about the relationship between your credit behaviors and your credit score, and see how adjusting certain habits can improve your credit.
Develop credit-building habits with account alerts
If you find yourself upping the number of gifts you want to buy for your significant other, you may want to set up balance alerts. Many cards allow users to customize how and when they receive alerts, so you can get a heads-up — and rein in your spending — when your balance hits $50, $500 or $5,000.
Bill alerts can minimize the risk of missing a credit card payment, which can trigger late fees and penalty APRs and even damage your credit score. You can set them up with your card issuer to notify you days before your bill is due, or just put a recurring reminder on the calendar on your computer or phone.
Most credit cards also let you put your bill on auto-pay, simplifying the process even further. Just be sure you have the money to cover the bill in your bank account. Otherwise, you could get hit with a nasty overdraft fee.
Transfer your balance to save on interest
It's not ideal to carry a balance on your credit card, but if you do spend more than you can pay off, there are credit cards designed specifically to delay interest while you pay what you owe.
Balance transfer cards allow spenders to move a balance from a card where it's accumulating interest to one that charges no interest for a period of time. The promotional 0% APR periods on these cards typically last 12 to 18 months, giving you time to eliminate debt. And it's important that you do eliminate your debt before the promo period ends, because at that point interest will start piling onto any remaining balance.
Be aware that transferring your balance usually comes at a cost: Most cards charge a fee of around 3% of the amount to be transferred. For larger balances, that fee itself can be a pretty serious chunk of money. So compare the transfer fee with your potential interest savings to determine whether a balance transfer card is right for you.
Studying good credit habits, setting up account alerts, or applying for a balance transfer card isn't as exciting as watching your love unwrap that special gift you spent so much time and money to buy. But it could mean significantly less stress as you dance in the New Year.
MORE: Best Balance Transfer and 0% Interest Credit Cards of 2015
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MORE: Ultimate Guide to Using Online Banking to Manage Your Credit Card Activities
Kevin Cash is a staff writer at NerdWallet, a personal finance website. Email: kcash@nerdwallet.com. Twitter: @kevin_cash.
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