The holidays are filled with expenses: gift giving, philanthropic giving, and party going. While all these activities can be fun and give you that warm and fuzzy feeling, it’s easy to fall into common financial traps like overspending, racking up credit card debt, or neglecting your budget. Luckily, you can keep your budget off the “naughty list” at bay with some smart financial planning tips from Dover Federal Credit Union.

At Dover Federal Credit Union, we’re committed to helping you manage your finances and avoid these common pitfalls. In this blog, we'll give some guidance for using credit cards smartly and avoiding well-intended spending that can lead to debt. We'll also highlight some of the fantastic benefits that come with Dover Federal Credit Union's Mastercard® offerings to keep your holiday spending in check.

Overspending on Holiday Fun

Giving feels good! Whether it’s gifts, food & drink, or donations - these add up quickly! In fact, the average American spends $1,000 on holiday-related expenses.

How to avoid this:

Create a holiday budget before you start spending. Prioritize what’s most important - whether it’s spoiling your loved ones, a decked-out house, or the best holiday party. Set a spending limit for each category and stick to it. Dover Federal Credit Union offers budgeting tools and tips to help you manage your seasonal expenses while staying on track.

Falling into Credit Card Debt

In the moment, going over budget might not seem like a big deal, but this could snowball out of control with all the tempting deals and discounts.

How to avoid this:

Consider using cash or a debit card instead of credit for holiday purchases. This way, you can only spend what you have available in your account. If you do use a credit card, pay off the balance in full by the next billing cycle. Dover Federal Credit Union offers low-interest credit cards that can help you manage debt more effectively, but it’s crucial to use them wisely.

Not Having an Emergency Fund

The holidays should be fun, but unexpected expenses can create holiday horrors. Whether a last-minute teacher’s gift, car repair emergency, or another unplanned event - without an emergency fund, these surprise costs can cause financial stress.

How to avoid this:

Set aside an amount you are comfortable with for any emergency. This seems simple, but the temptation to dip into it can creep in, stay strong!

Holiday Scams

For most of us, the holidays are full of giving, getting, and goodwill. Criminals use holidays to take advantage of people's generous spirits.

How to avoid this:

Pay by credit card and keep receipts so you can try to get refunds if there’s an issue.

And don’t worry, Dover Federal Credit Union has your back. With Dover Federal’s Fraud Monitoring, keeping your card safe is as easy as sending a text. Our text alert service allows you to instantly keep tabs on suspicious card activity.

Deals & Steals

This time of year, retailers bombard you with super discounts and “freebies”. The temptation to treat yourself can be overwhelming!

From offers of “free gift with purchase” to buy-one get-one (BOGO) - your impulse control with be put to the test!

How to avoid this:

When in doubt, channel Marie Kondo and ask yourself, “Does this bring me joy?”

Or a more financial approach, “Does this align with my budget?”

Plans for Payment

Say NO to payment plans!

How to avoid this:

Don’t fall for buy now, pay later offers, these usually come with hidden fees and penalties. Choose a Dover Federal Mastercard® instead.

Dover Federal Credit Union offers two excellent choices: the Advantage Mastercard® and the Cash Back Mastercard®. Both cards provide unique advantages:

• Advantage Mastercard® offers a low variable interest rate, no annual fees, and a generous 25-day grace period for purchases, making it ideal for paying down balances without incurring extra costs.
• Cash Back Mastercard® rewards you with 2% cash back on everyday purchases, which can help you save money while spending.

The key is to choose a card that aligns with your spending habits, whether you want to pay off debt or earn rewards.

Dover Federal Credit Union also has a Credit Card Payoff Calculator to help manage your payment goals.

Conclusion

Like many credit card holders, the holidays result in overspending and now it’s time to face the task of paying off your credit card balance. Don’t beat yourself up over it and set yourself up for the New Year by:

• Sticking to your budget
• Having an emergency fund
• Being vigilant for fraud
• Letting Dover Federal help your finances get back on track with our online tools

Frequently Asked Questions (FAQs)

1. What’s the average cost of holiday celebrations?

The average American spends close to $1000 on holiday-related expenses. Creating a budget can help manage these costs.

2. How can I avoid overspending during the holidays?

Make a budget, shop early, and consider DIY options to reduce expenses. Stick to cash or debit to avoid accumulating debt.

3. Is it better to use cash or a credit card for holiday purchases?

Cash or debit cards help prevent overspending, but if you use a credit card, try to pay off the balance in full to avoid interest.

4. What should I do if I already have credit card debt?

Dover Federal Credit Union offers low-interest credit cards and debt management resources to help you pay down balances more effectively.

5. How can I prepare for the holidays?

Start saving for seasonal events early by setting aside a small amount each month. Consider opening a dedicated holiday savings account.

6. What’s the benefit of shopping for the holidays early?

Shopping early can help you find the best deals, avoid last-minute price hikes, and reduce the temptation to overspend.

Dover Federal Credit Union

For 66 years, Dover Federal Credit Union has served as a member-owned financial cooperative, designed to provide access to equitable financial products and services that create stability and lead to establishing generational wealth. Today we serve over 44,000 members, encompassing the military, Delaware families and Employer Groups. Serving Camden, Dover, Middletown, Milford, Smyrna & the New Castle areas in branch & online.