NEW YORK ( TheStreet) -- American consumers may be gearing up for Black Friday, and the holiday shopping season, but if they don't pay attention, that holiday season may steamroll their personal finances.
The National Retail Foundation says that holiday spending will rise 4.1% from last year, to $586 billion. That figure beats the average growth rate for holiday spending, which the NRF pegs at 3.5% over the past 10 years.
With all that on the table, consumers need to watch out for any "holiday hangover" from all that spending activity, says Chicago-based TransUnion.
TransUnion says that more than 40% of U.S. consumers plan to spend more than $250 on gifts this year, and that the holidays tend to trigger a "reflex" in shoppers that urges them to spend more -- and not always carefully. Overspending, being lax about identity thieves, and not paying holiday shopping bills on time can lead to lower credit scores, higher debt and, in the case of I.D. theft, a financial headache that may not go away for months, the credit rating giant reports.To keep that from happening, TransUnion offers a handy "to-do" list for holiday shoppers that promises to keep their financial position as stable on Jan. 1 as it was Nov. 1. Here's a look at some of the best tips:
- Know where you stand going in. Before using your credit card this weekend, know what your balance is and where your card's interest rate stands. That gives you a benchmark of where you are financially on your credit card debt. The farther you get from that benchmark, the more financial trouble you're looking at.
- Know what happens when you open a store credit card. Open a store credit card and you can expect to see your credit score to decline, at least for the short term. A better idea: Use your debit card or cash to pay for store purchases and keep your credit score as pristine as possible. "If you are concerned about your credit score, it might be a better idea to pay for holiday shopping with cash," says Heather Battison, TransUnion's senior director of consumer education. "If lenders see a high credit utilization ratio, they might conclude that you're 'maxing out,' or doing more spending than you can pay for."
- Ramp up your credit card payments. Avoid excessive credit card interest by paying off credit cards with the highest interest rates first. As TransUnion says, there's no reason to pay any more in credit card interest than you have to.
- Bring only the essentials. When holiday shopping, empty your wallet -- literally. Bring only your drivers license and any credit or debit card - and leave everything else at home. That means library cards, Social Security cards, club cards and passport. All of those documents - which you don't need for shopping - offer a treasure trove of data for identity thieves to steal.
- Stress the "S." When shopping online, only use retail websites with strict security measures protecting your financial data. A tip: Do business only with online businesses whose URL starts with "https." That extra "s" signifies that the retailer is adhering to the most stringent data security standards.