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Credit and gift giving

With the holidays in full swing, many people in Chicago and the rest of the country will be pulling the plastic out of their wallets to make purchases for friends and family. The downside to this is that it is easy to amass large amounts of credit card debt. However, there are things you can do so you avoid the pitfall of being one of the 25 percent of credit card holders who end up in massive debt due to holiday spending.

If at all possible, start saving for purchases and only use cash to buy gifts. Going this route, you will avoid going into debt completely and won't have to worry about paying off the gifts you bought in December in July or August of the following year.

You will also want to avoid the tempting offers that credit card companies introduce this time each year. Many consumers do not realize that a cred inquiry for a new credit card can lower your credit score by up to 20 points. So, unless you need a new credit card for some reason, it is better to stick with the cards you have than go shopping for a new one.

Before you step foot in the department or toy store, make a list of planned purchases and stick to it. Do not start wandering every aisle searching for gift ideas. This will lead to impulse purchases, and if you are using a credit card to pay for items, even more debt. If you need ideas for gifts, surf the store's online website, make the list and then visit the brick and mortar store.

Instead of using just one card and racking up a large balance, spread purchases over several cards if possible. This will lead to smaller balances and will reflect positively on your credit score, since none of your cards will approach their maximum balances. Also, you should only purchase what you can afford to pay off in a few months' time.

These tips should enable you to spread cheer through gift giving without racking up major debt. If however, you do find yourself in a position where your debt is unmanageable, speaking to a legal professional with experience in debt management can help. There are ways you can get your debt back under control, and these individuals can help you find those solutions.

Source: KCTV5, "Credit card spending at holidays can hurt your financial future" Erika Tallan, Nov. 29, 2013

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