Black Friday: At the best of times, it’s a highly anticipated party-like atmosphere in which you get some or all of your holiday season shopping done at ridiculously low prices. At the worst of times, it’s a spaghetti mess of mile-long line-ups and frenzied grabbing of the last item on a shelf, and then hours in line to be served by harried cashiers.
And for many people, it’s a time when credit scores can potentially take a beating. While your credit cards might have been tucked away and seldom-used for the past couple of months, they come out of hibernation and nearly melt from overuse as you purchase gifts for family and friends, outfits that you might need during the winter season, and other need-to-buy and nice-to-own items that are sale-priced.
If you want to maximize your enjoyment of Black Friday and minimize the pain you’ll feel in your credit score afterward, be sure to follow these four essential tips.
1. Plan Ahead
I can’t stress this enough. Just because something has a big flashy price tag and happens to be sold during Black Friday does not make it a good deal. Make a list of what you want to buy beforehand so that you don’t get caught up in the shopper’s disease of buying anything that you want to own. And plan ahead to make sure that the item being sold is actually offered at a compelling sale price. If you only save a couple of bucks off of the non-sale price, why bother waiting hours in line?
2. Pay Cash or Use Credit Cards Wisely
Credit cards allow us to defer payments on items, but it can be tempting to buy more than we can afford. You can avoid this by setting a very strict budget or, better yet, paying cash for your items. You’ll also avoid the risk of letting your credit cards fall into the wrong hands and becoming a victim of identity theft at a time when your guard is often down.
3. Get Receipts for Everything
When you make a purchase – whether it’s a gift for your kids or a package of on-sale toothpaste or even a nice lunch at a restaurant – keep your receipts. All of them. Keep them altogether and when your credit card bill comes in the mail, review it carefully against your receipts. Watch for discrepancies between what the receipt says and what the statement says, and watch for purchases at stores where you didn’t shop.
4. Pay Off Your Credit Cards Right Away
If you choose to pay with your credit card instead of cash, that’s OK. Just make sure you pay off your credit card right away. This may be harder to do over the spending-heavy holiday season, but it will help you maintain the healthiest credit all year long. If you can’t pay them off, work to keep the balances as low as possible. Keeping your credit card balances low — that is, using a smaller percentage of your available credit — can help your debt utilization ratio, which is a major factor in your credit score calculation.
The holidays are a good time to get familiar with your credit (if you aren’t already). To do that, you can pull your credit reports — which you can get for free once a year — and look for errors or unauthorized accounts (which could be a sign of identity theft). You can also monitor your credit scores to track your credit health — which you can do for free using a tool like Credit.com’s Credit Report Card.
You might be looking forward to the throngs of eager shoppers on Black Friday, but you’ll enjoy the day even more if you follow these four tips for a credit-safe day.
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