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Holiday Spike In Retail Credit Cards Reminds: Watch Those Balances

November 15th, 2016 · No Comments · Credit Cards

by Kristy Welsh

(Last Updated On: August 25, 2017)

Holiday Spike In Retail Credit Cards Reminds Watch Those Balances

Every holiday season, we see a spike in new retail credit card accounts. But as helpful as they may be in financing holiday expenses, retail credit cards can wreak havoc on your financial health in the New Year. The takeaway? Watch those balances.

Retail Credit Cards: The Holiday Spike

As reported by credit reporting bureau TransUnion, consumers open more retail credit cards during the holiday season than any other time of the year. Only time will tell how many are opened this holiday season, but we can get a pretty good idea based on last year’s numbers.

During the 2015 holiday season, there were:

  • 2.03x more Discount Store retail cards opened than other times of the year
  • 1.97x more Online retail cards opened than other times of the year
  • 1.77x more Jewelry retail cards opened than other times of the year
  • 1.56x more Department Store retail cards opened than other times of the year
  • 1.35x more Clothing retail cards opened than other times of the year
  • 1.35x more Electronic retail cards opened than other times of the year
  • 1.20x more Furniture retail cards opened than other times of the year
  • 1.03x more Home Improvement retail cards opened than other times of the year

What impact will all of this new retail credit have on consumers?

TransUnion projects retail credit card balances will reach $1,768 in the fourth quarter of 2016 – a hefty debt to carry into the New Year, especially considering one very important factor:

Interest rates on retail credit cards are on the rise, with nearly half of APRs at nearly 25 percent.

Keeping Those Balances In Check

If you are going to use a retail credit card this holiday season, apply the same best practices recommended for credit cards across the board – return the balance to zero every month. If that means cutting your holiday budget in half, so be it. The holidays will come and go but, if you’re not careful, retail credit card balances will be a drag on your finances well into 2017.

That said, if you cannot see any way around carrying the balance of holiday credit card spending into the New Year, at the very least consider using a regular credit card instead; CreditCards.com reports that the current national average for all credit cards is significantly lower than retail credit cards at just 15.18 percent.

At the very least, if you end up carrying holiday credit card balances in to the New Year, always make more than the minimum payment. These three steps to paying off credit card debt will help.

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