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Ten Dangerous New Year Shopping Debt Traps and How to Avoid Them

Shopping on New Year is a hassle for most people; not only do they have to rush to the stores to get the best deals before they run out but also prepare for other festivities at their homes. The trend of shopping on New Year is not something new, people have always wanted to dress up and buy luxury goods on New Year’s Eve as a reward for having worked hard throughout the year.

A lot of companies look at this New Year’s period as an opportunity to increase sales; they make it easier for consumers to purchase goods by offering discounts and deals. A lot of people go on a shopping frenzy and end up going beyond their financial limits and as a result their debts are increased by a considerable amount and they fall into a trap of false necessity.

This spending spree in the spirit of Christmas and New Year may be a nice tradition, but spending beyond your limits is rather unnecessary; however, people only come to this realization once they have made this mistake and gone into debt. These debt traps are definitely avoidable if you know how to avoid them.

Consolidated Credit is the best company which provides a debt calculator, check your debt from there and then check the listed below debt traps that every consumer must be aware of and the ways to avoid them:

 

Plan

Before you go out to shop, make a list of all things you want to buy and stick to it. Unplanned shopping can lead to high spending and will thus increase debts.

Family Talk

Have a discussion with your family and underline the circumstances you are facing, let them know of the budget that is available for spending and make sure that you as a group do not go over it. Less spending now would mean more savings for the future and a debt free life.

Needs over Wants

Every consumer must prioritize, they must be very careful when spending their money or else they could be looking at a huge pile of debt.

Utility bills have to be paid at the end of each month and people should keep this in mind when they go shopping. Control your impulse and do not go overboard at any cost. What’s the point in having a few expensive shirts if you can’t pay your rent or electricity bill?

Credit Cards

Credit Cards are first on the list; they are a major reason why you go into debt. Credit Cards create more problems than they solve. According to a recent study, people using credit cards spent a lot more on shopping than people who paid by cash or debit cards.

Leave your credit card at home, it may be tempting but the costs of buying on your credit outweigh the benefits, so it’s not worth the risk. You will also have to pay high interest rates, so at New Year’s time avoid using your credit card and stay away from debt.

Credit Score

Always check your credit score on a regular basis and try to maintain a good score so that you get benefits and longer pay periods. You must always pay the minimum debt amount on your credit card to avoid a bad rating by your bank.

Store Cards

Stores offer you great incentives to use their cards with up to 15% off on purchases; however, this is another debt trap that most consumers are unaware of. A small discount now could end up as hundreds of dollars in interest payments down the road. These cards often have very short payment periods and low credit limits; a well informed consumer will always avoid using such cards.

Gifts

The New Year is a time for celebration, people normally exchange gifts and many believe that in order to make a good impression you need to get something really expensive. However, this is another false trap and people can put a huge financial burden on themselves in an attempt to impress others.

You do not need to go over budget; instead, you could be creative and come up with solutions that are cheaper but still as effective. Some people invite friends and family over and have home cooked dinners while others go to a park for a picnic.

Save

Even if you overspend on New Year’s, you can still save face if you have an emergency fund saving account. An emergency fund will help you get out of debt and will come in handy in times of need.

The 401(K)

Do not overspend on New Year’s so much that you have to take money out of your retirement plan. This is the worst thing you could do; you must protect your future by conserving these savings so don’t be tempted by the fancy items at the stores and try to avoid this debt trap.

Economical

A lot of stores have fixed low prices. These are aimed at selling to the average consumer, so it is a good idea to check these stores for deals and save unnecessary costs.

Conclusion

These debt traps are created by marketers to earn more profits and consumers are easily lured into them. These tips will help you avoid the NewYear shopping debt traps and improve your finances, Consolidated Credit provide a debt calculator here.

About the Author

AJ is an experienced professional in the field of finance and has written numerous articles and blogs to help consumers with their financial issues. She suggests to those in debt to use a debt calculator from Consolidated Credit.


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7 thoughts on “Ten Dangerous New Year Shopping Debt Traps and How to Avoid Them

  1. I’ve actually never felt the urge to buy because it’s the year end. Although, with tax season coming up, you know there will be a lot of advertising for tax refunds. These would definitely be good tips.c/

  2. I ALWAYS use credit cards (my cashback card, never a store card), but I’m very particular about how I manage them. I’ve never made a late payment, and I’m actually more responsible with my card than I am with cash; I realize I’m probably in the minority here, but it works for me.

  3. Practically every store that I visit tries to sell me their credit card and I always pull out my old faithful American Express. My account is always paid in full when the bill arrives and I accumulate points that are used to acquire things I don’t really need. I guess I could do better if I used a cash back card and maybe one day I will.

  4. I was really worried this year, thinking that I might fall victim to these sales, but I didn’t! It was so exciting for me and I hope everyone else got out with minimal casualties!

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