Stores have been bursting at the seams with holiday decor since Halloween in anticipation for their annual holiday shopping frenzy that is now in full force. Consumers are hitting brick-and-mortar and online stores, trying to find the best presents at the best prices.

There are some rules that every individual should follow to protect their credit and finances while shopping for gifts. This is especially important for those who are considering making a large purchase or taking out a loan in the New Year.

1. Plan to pay off your credit cards or use cash.

   Credit card points are tempting and can offer excellent rewards, but it’s much easier to overspend when using credit. When you carry cash and use it first, you’re more likely to be cautious with what you buy.

2. If using credit, plan for paying off the balance.

   Don’t carry the burden of a credit card balance into 2018. If you choose to use credit to reap the rewards or to pay it off when your bonus rolls in, make sure you’re keeping track of the spending and set a limit for yourself. High balances on credit cards can cause scores to plummet.  The closer your balances inch up to the limit the further your scores can drop.  If you plan on applying for a loan, lease, or line make sure to pay the balances down asap.  Balances usually update to credit scores in the beginning of each month.  Be sure to wait to apply for the funding after the payment updates to the credit bureaus so your scores are at their highest when your application is turned in.

3. Don’t fall into the trap of opening new store credit cards.

   In addition to all the store deals and discounts, most retail stores offer an instore credit card. It’s likely that at checkout they will offer you an additional discount (10 – 25% usually) just for applying to the card. When opening a credit card, it’s important to do research, it’s not always wise to open an account on a whim. Store credit cards also carry a much higher interest rate than regular cards, upwards of 25 -30%. Make sure, if you do open a store card, that you limit carrying a balance. At such a high rate this cancels out any of the purchase savings. Opening a new card will generate a hard inquiry and can make your average age of credit younger. Both of which can drop your scores. Younger credit makes you a higher risk therefore reduces your scores.  If you’re planning to apply for a mortgage or large loan soon you may not want to compromise your scores. Even a hard inquiry can drop your scores a few points and if you are now a few points under the score threshold needed to get the best pricing on a mortgage it could cost you hundreds of thousands more over the life of the loan.

4. Set-up a holiday budget.

   We recommend setting up a budget well before you hit the stores. Plan out who you will be purchasing gifts for and how much you spend on each person. Some people start out with a total budget then individually divide it up. Having even a rough budget can help stop yourself from over spending.

5. Make a list.

   Go to the store prepared with a list of who and what you will be purchasing. It’s easy to get roped into all the discounts and promotions, so being prepared can help limit temptation and keep your shopping budget-friendly.

6. Be aware of fake retailer websites.

   Always be cautious about who you give your credit card information to. This is especially true today with all the online shopping going on. Make sure you’re shopping on a secure site that is the genuine site of the retailer. There have been times where scammers have been able to replicate retailer websites to rip off customers.  Do not input any personal / payment information until you’re sure who you are purchasing from.

7. Monitor your credit.

   Scams and hacks happen all the time, including during the holiday season. The best way to stay on top of your credit is to monitor each report for suspicious activity. North Shore offers a boutique-style credit monitoring service, our credit experts will keep an eye on your credit daily watching out for new account activity and sudden drops in your scores.

By taking the initiative to protect your credit, you’re making the process of getting an affordable mortgage or loan easier in the future. This is especially true for people with young and/or very little credit and they build up their scores.