Today I learned that on average a person will spend about $5000.00 on their credit card(s) for purchasing gifts during the Christmas holiday season.
Credit cards make it easy for the consumer to swipe and have gifts for their loved ones and friends. With the increase in internet shopping, credit card usage is up year after year.
The important thing to remember is the fact that, post-holiday spending adds up and could take you years to pay off. Many people fall for the easy traps of over spending to show their love by purchasing expensive items that in reality they cannot truly afford.
This article will explore the actual costs of using a credit card and alternatives for a wonderful holiday/Christmas season.
HOW MUCH WILL IT ACTUALLY COST YOU?
Have you ever wondered how much credit card usage will actually cost you? Have you ever done the calculations? I am sure about 99% of us have not! I plugged in the number below using the FTC's credit card calculator to find out how much our $5000 average purchases will actually cost us:
Now I am using the $5000 average with a 17% average interest rate credit cards charge, I suggest you plug in what you plan to spend by visiting; http://www.ftc.gov/creditcardcalculator to use the calculator from an organization that is there to protect consumers.
If you pay the minimum, it will take you 8 years to pay off this amount if you don't add any other charges on top of that, so each year you fall into the trap of adding more and more debt. The interest charges came out to about $2000.00 if you pay on time. So your initial purchase of $5000 will cost you an extra $2000 totalling $7000.00!
The FTC credit card calculator link I provided above also has a cool feature that lets you plug in numbers to help you understand how much it will take to pay off your debt sooner and I suggest you take a visit and plug in your current debt number to find out where you are before adding to the amount you already owe.
CAN'T BUY ME LOVE?
Ever heard of that saying? Do you believe in it? Many of us must if we spend on average about $5000 on gifts using credit cards. Does Christmas equal gift giving or have we lost sight of what is important. This year my family is doing something completely different to 1) Reduce the stress of having to buy our loved ones a gift 2) be frugal and give what truly is valuable 3) live life debt free.
This year, my brother's and I agreed to not give one another gifts like we usually do each year and have decided to pitch in to buy gifts for our parents and younger family members. Instead of giving each other gifts we committed to spending some time together next year on a fishing trip (which we will be saving for) and spend quality time together. To me time is much more valuable than a new tech gadget or jewelry item. When someone is given time, it is the most valuable thing in life and you don't need a credit card to give it.
MANAGE EXPECTATIONS
Communicate with your friends and loved ones and talk about changing the way you celebrate Christmas with one another. The tradition of giving gifts is wonderful and magical, especially for kids and significant others. I am not saying take Christmas away from the kids, but when you add up all of your friends, family and other who give you gifts, the bill really adds up. Create other suggestions on spending and how to make it magical versus exchanging gifts. I can honestly tell you that I still only remember one outstanding gift that was given to me from a friend. When you truly can't afford to buy something, you must not be lured into the trap of overspending and falling into the trap of using a credit card.
Gone are the days of budgeting and planning for such things as Christmas giving. When time is made into such actions as gift giving, then it is much more meaningful. I have a Christmas list for people that I will buy gifts for and will buy throughout the year if I come across something and hold onto it until Christmas. I budget for it so I won't have to use my credit card, but use my debit card.
This Christmas be aware of the credit card trap and know how much it will actually cost you to give those gifts you give. Find other meaningful ways to show you care and remember, you can't buy love, and Christmas is no exception.
From vuvan.com, post Holiday Credit Card Trap
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