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10 Tips to Better Holiday Credit Card Management


NEW YORK ( LowCards.com) -- The holidays likely mean plenty of charges on your credit card, especially if -- like so many people -- you let the emotions of gift giving overcome your financial common sense.

Here are 10 credit card tips to make this an affordable holiday season and to help you avoid paying for Christmas 2013 long after the gifts are forgotten.

1. Make a budget and a shopping list. Start with what you spent last year and keep a record of all gift purchases and holiday expenses -- from postage stamps to the food for the office party. It is hard for shoppers to make a budget and easy to underestimate their spending. According to the National Retail Federation, the average holiday shopper will spend $737.95 on gifts, decorations, greeting cards and more, two% less than the $752.24 they spent last year.

2. Change your shopping habits now before you get into the spirit of the season. If you can't afford to pay off your credit card in November, you can't afford to add more to it in December.

3. The best way to stick to your budget and avoid impulse spending is to pay in cash. People who pay in cash spend less than those that pay with plastic. Paying cash is a painful reminder of how much things actually cost.

4. Verify the credit limit and your balance on every credit card you use. Charging to your limit can trigger a lower credit score and a higher APR.

5. If you are looking for a new credit card, this may be a good time to apply. If the card has a zero-percent introductory rate for purchases for a year or longer, you can use your card as a free loan for holiday spending. This is recommended only if you pay it off before the interest charges begin.

6. Pay attention to the price of the item after you buy it. If the price drops during a specified time and you paid with a credit card, some issuers may reimburse the difference. MasterCard's (MA) Price Protection offers this for 60 days; Citi  (C) Price Rewind offers this for 30 days if the price is at least $25 lower that what you paid. You may have to register the purchase online as well as keep your store and credit card receipts as proof of purchase.

7. If you are going to carry a balance, ask for a lower rate. Contact your issuer; there is no guarantee your rate will be lowered, but it never hurts to ask.

8. Avoid using the convenience checks that appear regularly in your mailbox this time of year. Read the terms and conditions to know exactly what you are getting. There is typically a 3% or 4% fee for using these checks, and they can charge a higher interest rate than your credit card.

9. Use your rewards points for holiday shopping. These can be used to buy gift cards with many retailers.

10. Pay attention to partner programs. Most credit card issuers have a partner program that offers discounts or bonuses for online purchases with certain companies. The programs vary by issuer, but the partners could be stores where you already shop. Discover turns $20 rewards into $25 gift cards. Citi gives additional points when you shop at retail partners such as 12 points per $1 spent at Restaurant.com and five points per $1 spent at Harry and David.

Bill Hardekopf is chief executive of LowCards.com, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."

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