Everybody wants to give their children or spouse the best Christmas ever, and everyone wants to give family members the gifts they want and deserve. However, it is possible to be overzealous in your gift giving, and when the New Year comes you may find the consequences are worse than you expected. If you forget your budget or simply don’t recognize how much you’re spending, you could be in far worse financial trouble than you thought. Here are a few of the downsides to holiday overspending:
- Higher interest on your credit cards. When you run up your credit card debt and are unable to pay it back on time, your interest will only grow. This may result in even more debt that you can’t pay, and if you aren’t careful your debt will begin to grow exponentially.
- Hurt your credit score. This can be worse than you think, as your credit score will affect not only how much credit you are allowed by your current credit card company, but also the amount you are able to borrow from others. If you reach your limit on one card and hope to open a new line of credit to get more spending power, you may be sorely disappointed in how much you are allowed. If you anticipate having borrowing power in 2015, make sure to spend wisely this holiday season.
- Higher fees. By overspending during Christmas, you hurt your reliability and your reputation with your creditors, leading to lower limits and higher fees.
Be smart this holiday season and prepare yourself for the New Year.