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Avoiding Holiday Debt: How To Use Credit Wisely

Avoiding Holiday Debt: How To Use Credit WiselyA person holding credit card while shopping online during the holiday season.

The holiday season is traditionally a time of joy and celebration. People from all backgrounds look forward to this festive time of year, spending time with loved ones and indulging in delicious food, drinks, and gifts. However, the financial pressures of the holiday season can easily lead to overspending and accumulation of debt.

While credit cards can offer convenience and flexibility, they can also tempt people into overspending, leading to a “financial hangover” when the festivities are over. In this blog, Landmark National Bank will provide some holiday budgeting tips and advice to help you wisely utilize credit so you can stay within your budget while still enjoying the magic of the season.

Plan Your Budget

Before the holiday season begins, sit down and create a reasonable budget. List all your expected expenses, including gifts, travel, food, and decorations. Then compare this total to your disposable income. If there’s a gap, look for ways to cut back or save in other areas. Remember, it’s better to adjust your plans now than to accumulate debt you’ll struggle to pay off later!

Know When To Use Cash

While credit cards can offer convenience and perks, it’s best to use cash in certain situations. Keeping cash in your wallet for discretionary purchases like coffee or lunch allows you to easily keep track of the money you spend and stick to your budget. You can also avoid the temptation of overspending because there’s a limit to how much cash you have on hand.

Pay Your Bill ASAP

Make sure you pay off your credit card bill as soon as possible and try to pay above the minimum (if not the full amount) each time. The longer you wait to pay, the more interest you’ll accrue, which can quickly spiral out of control during the holiday season when expenses pile up. If possible, set up automatic payments to ensure you never miss a beat.

Look for Deals and Discounts

To stretch your holiday budget as far as possible, be on the lookout for deals and discounts. Many retailers offer flash sales during the holiday season, and you can often find coupons online for free shipping or other deals. Also, consider signing up for email alerts from your favorite stores to be notified of upcoming sales.

Avoid Impulse Purchases

Impulse purchases can quickly derail your budget. To avoid this, make a shopping list before you go to the store and stick to it. Often, you’ll find you don’t need as much as you thought. If you see something online you want that’s not a necessity, give yourself a cooling-off period before buying it. A good practice is to wait 24 hours. If you don’t want the item as much a day later, it’s not worth it.

Consider Homemade Gifts and DIY Decorations

Homemade gifts and decorations can save you money and add a personal touch to your holiday celebrations. There are countless DIY holiday gift ideas online that can inspire you. Plus, making gifts and decorations can be a fun holiday activity that gets the whole family involved.

Get Expert Advice From Landmark National Bank

If you’re feeling overwhelmed by holiday expenses, consider seeking assistance from a financial expert. At Landmark National Bank, we offer a range of services for checking accounts and savings accounts to help you manage your money wisely. We can help you set up a budget, choose the right credit card, and develop a plan to pay off your bills on time.

Choosing to keep your money with Landmark grants you access to expert advice and assistance from a financial partner dedicated to helping you manage your money. Contact Landmark National Bank today or locate a bank branch near you!

Resolutions That Pay Off: How To Improve Your Credit Score in 2024

Resolutions That Pay Off: How To Improve Your Credit Score in 2024A cartoon person pushes the needle on “credit score,” scale.As you begin thinking about your New Year’s resolutions, don’t forget to set some financial goals for the upcoming year. Set a goal of improving your credit score to help ensure a bright financial future. A good credit score can help you achieve other goals, such as buying a home, renting a new apartment, or purchasing an automobile.

What Is Credit? Understanding Credit and Credit Scores

If you don’t know much about your credit and credit score, you’re not alone! In fact, in a 2019 study, CNBC found that four out of 10 Americans had no idea how their credit score is determined. For many U.S. consumers, a credit score can feel like a black box shrouded in mystery. In this blog, we hope to clear up some of the fog surrounding credit scores.

A credit score is essentially a three-digit number ranging from 300-850 that indicates your credit risk level, especially when you’re applying for a loan or financing. You may hear your credit score defined as a FICO score. This is because the Fair Isaac Corporation (FICO) created the credit score model. 

Why Do Credit Scores Matter?

For those who are new to learning about credit and credit scores, you may not understand why having a good credit score matters. The reality is that your credit score is taken into account in many different situations.

Credit scores are considered when you need a home loan or mortgage, if you apply to rent an apartment, when applying for credit cards, and more. Lenders typically offer significantly better interest rates on loans to those with better credit scores.

How Are Credit Scores Determined?

You may be wondering how credit scores are determined. FICO breaks down factors influencing your score into percentages, where higher percentages mean a higher impact on your score:

  • 35% payment history. Have you paid off past debt on time (credit card bills, loans, etc.)?
  • 30% accounts owed. How much debt do you have? What percentage of your credit do you use? 
  • 15% length of credit history. How long have you had credit accounts? 
  • 10% credit mix. Do you have a variety of credit accounts? 
  • 10% new credit. Have you opened several new accounts in a short period of time?

How To Improve Your Credit Score Through Good Financial Habits

Apply for a Credit Card if You Don’t Have One

Woman smiles while holding a phone and credit card.

If you’re a student or a younger adult, you may not have many credit accounts yet. While you don’t need a credit card to build your credit score, responsibly using a credit card can go a long way toward improving your score.

When you do end up getting your first credit card, be sure to spend responsibly by paying your balance as soon as possible and only using your credit card for items you can afford. Many consumers opt to use their credit cards exclusively for necessities they can afford, like gas and groceries.

Regularly Monitor Your Credit Usage

Whether you have installment loans, a credit card, or another type of credit account, keeping track of your credit utilization is essential. Look for credit cards that allow you to view usage online, such as Landmark National Bank’s credit cards.

A general rule of thumb is to keep your credit utilization below 30% of your overall limit. For example, this would mean a consumer with a $10,000 credit limit should keep their balance below $3,000. To keep your credit utilization low, pay off your statement frequently. 

Make All Payments on Time

Since payment history is a significant factor when it comes to your credit score, it’s essential to pay credit card bills, loan installments, financing accounts, and mortgage loans on time. Late payments can lower your score and stay on your credit report for months or years.

If you have trouble remembering to make payments, try these strategies:

  • Use autopay when available.
  • Create a reminder on your smartphone’s calendar app to make payments.
  • Set up bill pay reminders if possible.

Review Your Credit Report Frequently and Request Corrections When Needed

Businesswoman reviews credit report for errors, using a laptop and calculator

Your credit score is broken down in detail on your credit report, which is a summary of your credit history and usage. In short, your credit report basically determines your score. Checking your credit report frequently can help you catch potential errors made by the credit agencies that generate the reports and possibly improve your credit score. You can get a free credit report at annualcreditreport.com, a website run by the three major credit bureaus in the U.S.

Build Your Credit With Resources From Landmark National Bank

If you’re ready to take the first steps toward a better credit score, let Landmark National Bank help. Check out our personal credit card options, which can be a great first step toward building credit. If you’re improving your credit score to buy a home, Landmark has home loans that can help you through the process.

Start on your path toward meeting your financial goals with the support of a truly excellent bank. Locate your nearest Landmark National Bank branch to get started. At all our Kansas bank branches, you’ll find friendly banking professionals happy to help you with your banking needs. You can also find more helpful articles on personal finance, budgeting, estate planning, and more on our blog.