With the festive season fast approaching, it’s a good time to start planning how you will pay for gifts and entertaining over the Christmas and New Year period.

For many, charging everything to the credit card can be tempting however the upshot can be a nasty New Year hangover in the form of a hefty credit card bill that can linger for months or even years.

Limiting the amount you spend on credit cards is always a smart move, and setting a budget for gifts and entertaining is a good way to keep tabs on your spending and to make sure you don’t go overboard.

When it comes to buying gifts for family and friends it’s a good idea to draw up a list and to stick to it.  Talking to your family and friends beforehand about spending limits and gift ideas can help to establish some parameters for spending and eliminate some of the stress and pressure to find the right gift or to spend more than you had bargained for.  It’s important to remember that the festive season is more about catching up with family and friends than it is about buying and exchanging gifts so it’s important to keep things in perspective. Try not to get too carried away.

Entertaining family and friends can be a costly exercise at Christmas especially if you’re planning to celebrate with a lunch or dinner at a special restaurant.  A traditional Christmas meal can set you back a small fortune particularly once alcoholic beverages are added to the equation. However spending more money doesn’t necessarily mean having more fun. In fact, you may find low cost, quality activities such as a family picnic at a local park, or a day at the beach to be just as enjoyable as a formal lunch or dinner if not more so.

The lead up to Christmas is the busiest time of year for retailers and it’s easy to get caught up in the frenzy of pre-Christmas shopping.  If you have to make purchases on a credit card, think carefully about whether you’ll be able to pay off the items in full when your next statement arrives.

If your credit card is already buckling under the pressure of previous charges, it could be worth switching to a cheaper card.   There are a number of ‘no thrills’ low-interest rate credit cards on the market, so it is possible to reduce your interest charges by simply moving to a less expensive card.

The easiest way to avoid a post-Christmas credit card headache is to avoid going overboard in the first place.  Despite the relentless TV commercials, Christmas isn’t about material things.  Find other ways to feel rich instead. Spending quality time with family and friends in truly memorable ways will prove to be a far more rewarding experience than exchanging a host of soon to be forgotten gifts.

Source: Capstone.