5 Credit Card Problems to Avoid at Christmas

By Aaron Crowe

Christmas shopping can be hectic. Shopping with a credit card can add to the turmoil — if you’re not careful.

Whether you’re still paying off last year’s Christmas debt, had your identity stolen or opened a credit card that you now regret, there are plenty of specific credit card problems that are especially prevalent at Christmas.

Here are five to look out for:

Revolving credit

Carrying credit card balances from month to month can become expensive, especially at Christmas when you’re more likely to spend more and use a credit card for gifts you can’t afford immediately.

As we’ve written before, the average person will spend $935 on holiday shopping this year, and much of it can end up on a credit card.

With the average credit card interest rate at 15 percent and with a $1,000 balance, paying the minimum of $25 per month would take $10 years to pay off and would cost nearly $400 in interest. In December 2026 will you remember what Christmas presents you bought in 2016 that you’re finally paying off through revolving credit?

Opening a store credit card

A store credit card is the last thing you want to do at a checkout line. The card will likely include a decent discount of 20 percent or more on that day’s purchases. But there are too many downsides after Christmas.

Store credit cards often have high interest rates of 23 percent or more. That APR could jump to 27 percent or so if you miss a payment.

The spending limits are low, so using them often can increase your utilization ratio — the percentage of the available credit you’re using. A high percentage can be a sign of possible default somewhere down the road, which won’t help you with other creditors.

Store-branded credit cards can only be used at the store that issued them. A Nordstrom card can’t be used at Kohl’s, or vice-versa.

Deferred interest

Paying deferred interest for a year or more on a store credit card for a big purchase isn’t unique to Christmas — mattress and furniture stores offer it often — but it can come in handy during the holidays if you’re splurging on a major gift for yourself or someone else.

No interest is charged if you pay off the balance before the advertised period ends — usually 12 months but sometimes longer.

If you make regular payments during those 12 months, it can be like getting a free loan. However, even if you pay off everything but leave one cent on the balance after the no-interest period ends, then you’ll be charged interest for the entire amount for the full introductory period.

If you’re going to buy a new stove for your favorite uncle at Christmas and use one of these store credit cards, be sure to pay it off before the zero-interest period ends.

Thieves

Credit card thieves are out year-round, but Christmas can bring out more of them.

Skimmers can try to copy your credit card information and steal your identity so they can replicate your card and buy stuff illegally. Store employees can also have devices attached to credit card readers to skim data.

Check your credit card statement carefully, and check it online if possible for quicker resolutions. If you see an item you didn’t buy, dispute it within 90 days. Set up text or email alerts on your credit card to alert you to large purchases or when your balance reaches a certain level.

We shouldn’t have to say this because it should be well known, but don’t shop online in a public place with unprotected Wi-Fi. Your credit card information could be easily stolen by a thief.

Focusing on credit card rewards

Earning credit card rewards with your Christmas spending can be a smart way to pay for a future trip, night out or just to pay off part of your credit card bill.

If your main focus is to earn more rewards by shopping more during the holidays, don’t do it. If you can pay the bill in full in January, great. If not, you’ll have revolving debt for at least a month and that won’t be a fun start to the new year.