Don’t Let Christmas Ruin Your Credit Score
When it comes to personal finance, Christmas does not need to weigh as heavily on you as it does on the great masses that enter the period unprepared and ill-disciplined. If you start planning now, you can help to significantly reduce costs this Christmas – and without sacrificing any festive cheer. And by staying ahead of the pack – apart from having some excellent savings to lean back on – you’ll also ensure that your credit score doesn’t get penalised, shielding yourself from the knock-on effect of further financial difficulties once the New Year begins.
As a general rule, it is important to remember that credit score is built up over several month or more and that the agencies tasked with setting your credit score reward you for behaviour that demonstrates you have a responsible attitude towards your finances. Months of disciplined spending – and a rising credit score – can all go to waste though if you slip up even once. For example, one late or missed credit card repayment can bring your credit score down by up to 100 points, undoing months of hard work. This is the danger that Christmas brings.
Top Money Saving Tips for Christmas
If you want to avoid falling into the same trap as millions of others this festive period, follow our Christmas money saving tips, below, to help navigate a safe passage through Christmas and enter January with your credit score intact – a fantastic foundation on which to build your future financial health.
Budget & stay disciplined
Most people who struggle financially at Christmas do so due to a lack of budgeting or a failure to follow their budgeting plans through – according to a Lloyds TSB survey, 41% of adults don’t budget at Christmas at all. Christmas budgeting doesn’t need to be overly complicated though. Take a piece of paper and make a list of all the people you want to buy presents for. Work out how much money you have and assign a specific amount to each person. It is also important to deduct spending money against any parties or events you plan to go to. Once you start spending – as long as you’re disciplined – this simple plan will let you stay in control, helping to protect your credit score as a result.
Shop online & use cashback sites
Aside from insulating yourself from the cold weather and avoiding the hordes of high-street shoppers, shopping online has some clear advantages. Most obviously, online shopping encourages a more disciplined approach to spending because it allows you to shop in a more emotionally detached manner and not be so prone to impulse buys. Use price comparison sites to research and locate the lowest price on each individual gift you want to buy. Write up your shopping list before you start and be methodical in the way you move through it, aiming to finish as quickly as possible without compromising on your research. Also, sign-up to a cashback site before you start as this will allow you to earn what is effectively free money on many of your purchases.
Try not to borrow but be sensible if you do & avoid store cards at all costs
You should try to survive Christmas without relying on credit and a smart way of doing this is to stagger some Christmas costs in the months preceding December. Otherwise, and this is a common issue faced at the end of the year, your entire December salary is likely to be eaten up by the extra demands that Christmas presents. If you do need to borrow though then it’s not the end of the world as long as you follow some basic advice, the most prudent of which is to never, under any circumstances, be tempted by store cards. Department store shop assistants can be very persuasive but store cards have whopping interest rate that will start to cripple you if you miss a payment, wrecking your credit score in the process. Instead, borrow at the lowest interest rates available to you and stay on top of repayments.
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