5 Holiday Shopping Mistakes That Could Hurt Your Credit Score (And How to Avoid Them)
5 Holiday Shopping Mistakes That Could Hurt Your Credit Score (And How to Avoid Them)
The holidays are a time of festive lights, cheerful music, and spreading joy to loved ones. But amid the excitement, it’s easy to let your credit habits slip—and that could lead to long-term financial headaches. Before diving into your seasonal shopping spree, steer clear of these common pitfalls to protect your credit health.
Mistake #1: Maxing Out Your Credit Cards
Even if you pay your bills on time, carrying a high balance relative to your credit limit can damage your score. Aim to use well below your available credit to avoid red flags with lenders.
Mistake #2: Relying on Low-Limit Cards
Cards with smaller credit limits might seem safer, but they’re easier to max out. A maxed-out card—even with a low limit—hurts your credit utilization ratio, a key factor in your score.
Mistake #3: Opening Too Many Store Cards
That “10% off today!” offer at checkout is tempting, but think twice. Every new card application triggers a hard inquiry, which temporarily lowers your credit score. Store cards often come with high interest rates, too, risking deeper debt if payments are missed.
Mistake #4: Falling for Deferred-Interest Promotions
“No interest if paid in full by X date!” sounds great—until you miss a payment. These plans often retroactively apply steep interest rates to the entire original balance, leaving you with a costly surprise.
Mistake #5: Closing Old Cards in a Panic
Closing accounts reduces your total available credit, which can hurt your utilization ratio. Unless a card has high fees, it’s usually better to keep it open (and inactive) to maintain a healthy credit history.
Key Takeaways:
- Keep credit utilization below 30% of your limit.
- Avoid opening multiple new cards in a short period.
- Read the fine print on deferred-interest deals.
- Prioritize paying off high-interest balances first.
- Monitor your credit score regularly for unexpected changes.
By staying mindful of these tips, you can enjoy the season’s festivities without jeopardizing your financial well-being. Happy—and responsible—holiday shopping!
