Limiting Credit Card Spending
Posted on December 4, 2007
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The holiday shopping rush started the day after Thanksgiving, and with only three weeks left until Christmas, it`s not going to let up, and much of that shopping will be done with credit cards.
Many banks across the country are struggling in the wake of the sub-prime home loan meltdown. They`re trying to reduce their risks, and experts say that means credit card spending limits will be heading lower.
Lower credit limits can be both good and bad. Some holiday shoppers could spend less as a result, but Americans love to spend.
“Every year, I spend probably more than I need to,” laughs shopper Jill Renner.
Having less available credit can backfire in more than one way. One reason is because it`ll be much easier to approach your maximum credit limit. Hitting the max means you`ll be slapped with a fee, and that`s just the half of it.
“Any time you use half of your credit line or more, then you have the potential of lowering your credit score,” says Bernie Harsche, a credit counselor.
In order to avoid that, you might decide to open another card to help ease the burden. That could wind up costing you, too, and experts say that`s the way banks and credit card companies want it.
“Instead of lowering it, they just keep it at the same price and offer you another credit card with the same company in hope to snag you with other fees,” Harsche says.
The obvious solution is to curb your spending, and smart shoppers know what they need to do this holiday season.
“A credit card is a great way to go as long as you stay in control and you know you can pay it off come January,” says Sherri Field, a holiday shopper.
“I pay cash,” Renner says. “There`s no bills to look forward to then in January and February.”
Financial counselors say that`s the best way to stay within your means.
If you do use credit cards and plan on opening another one, our credit expert says three credit cards is the limit.
by Kevin Gribble
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