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Why you should refrain from using your credit card this Christmas

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It's less than week away until Santa Claus comes down that chimney to deliver gifts for Christmas. Question: how did Santa Claus pay for all those presents? Let's hope it wasn't with a credit, otherwise he'll be in serious trouble.

We have all been there. We’re walking around the department store. We notice something pleasant as a gift for our loved ones (maybe ourselves?) and we decide to pick it up. When we get to the check-out line, we get asked, “cash, debit or credit?” At this moment, we ponder for a brief moment about putting it onto our Visa, MasterCard or any other credit card we may have.

The smart choice would be to pay cash or with your debit card. The wrong, debt-inducing, evil, terrible mistake to do would be to use your credit card, or as I like to call it, “The Mephistopheles.”

Studies have shown in the past that a person’s credit card debt soars substantially during the Christmas season. Experts say that we get caught up in the holiday spirit without thinking about the future or worry about the possible negatives that could transpire in the coming weeks.

There are many reasons why a person should never flex their credit card during the holiday season or at all. Sure, you may receive some short-term happiness for that $25 item, but how long and how much will you be paying for it?

Here are rational arguments to not use your credit card during Christmas.

Spending

Christmas is the time where you make more lavish purchases than any other time of the year. You have to buy $20 worth of items for the colleague you are apathetic towards. You must purchase that video game console for your girlfriend’s nephew. You even buy a dollar store gift bag for your dinner guest. Remember, before you splurge, you have to spend all that money for your family.

Spending all this money within a short timeframe could prompt you to consider paying it off later instead of now. That sounds great, but do you really want to be still paying for a bowtie at Thanksgiving? No. So, opt-out of credit card usage. And, please, for all that is heavenly, holy and godly, do not accept a department store credit card!

Interest

Interest; the worst part about borrowing money. After you put money on your credit, you are automatically charged interest. The question of “How much interest?” really depends on your credit card provider. The average consumer credit card rate is a little less than 17 percent.

Before you start showing off your Gold American Express card, think about how much interest you have to pay. Let’s say you spent $500 during Christmas, now you will have to transfer nearly $100 of your hard earned income to interest payments.

Of course, the interest rates put forward by Bank of Canada Governor Mark Carney and Federal Reserve Chairman Ben Bernanke influences such short-term decision making, but in the long-term, you’ll be paying dearly.

Budget

Budgeting during the year is hard enough for many. But budgeting during the holiday season could spell disaster. Western people are generally giving (that’s why we’re in the debt we’re in), and we want to please our friends, family, colleagues, the coffee shop owner down the street and the UPS delivery man we see once a month.

When you’re at a store and you hold that credit card with a $1,000 limit, you could actually convince yourself to spend more than your $500 Christmas budget. It’s easy to stand there, hold the item and trying to rationalize spending all that money – just like Mephistopheles did to Faust.

Moral of the story? When shopping, do not bring your credit card. Instead, go to a local lending store and pick up a preloaded card to ensure you do not go over your budget. Of course, you can always leave your card at home; withdraw money from your debit account and finish your shopping that way.

Credit cards are dangerous throughout the other 11 months of the year, but when it comes to the 12th month, it could become hazardous – and perhaps cost you your soul. Well, not that extreme.

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