If you’re looking to get the best prices for your holiday shopping list items, you may be planning on taking advantage of the retail sales extravaganzas which pop-up everywhere this time of year. Holiday sales events make this a popular time of year for upgrading household appliances, crossing an item or two off your wish list, or buying that perfect gift for a special someone. And with the right deal, you might be able to snag some high-end items at a fraction of the normal cost.
At Nickels, we are advocates for budget-based spending, but we recognize sales are another way to save money.
If you’ve been holding out for the holiday season to make big purchases, and plan on using your credit card, we’ve got a few tips to help ensure that your discounted gadget doesn’t end up costing your more than the original sticker price.
A credit card can be a great tool for allowing you to splurge occasionally and could give you a little extra time to accommodate your budget. But what about that interest? Good news! There are ways to eliminate interest on credit card purchases. But don’t fill your cart just yet. These interest-saving tips won’t work for every scenario and we advise to always start saving early for large purchases and to have a back-up plan.
Tip 1: Pay off new purchases during your grace period
This is a relatively simple one, but keep in mind your credit card starting balance must be $0 for it work. Most credit cards offer a grace period for new purchases, which starts from the time you make your purchase to when your bill is due (usually about 21 days). During this timeframe your balance does not accrue interest, and if you pay your balance in full before your due date you won’t be charged any interest. You’ll notice we said “most,” make sure you double check your credit card agreement to verify that your card does in fact offer a grace period.
Tip 2: Look for credit cards with 0% introductory offers
Many credit card companies will entice new customers with a limited introductory rate of 0% APR, which allows customers to pay of new purchases interest-free over the introductory period, which can be up to 15 months. If you know you won’t have the budget to pay off your entire purchase during your billing cycle, this is a great interest-free alternative. However, there are some caveats… no interest offers typically require a better than average credit score and if you’re late on even just one payment you’ll forfeit the offer and start accruing interest on your outstanding balance.
You may have noticed a theme when it comes to taking advantage of interest-free offers – timing is everything. One late or missed payment can cancel the best of intentions and cost you money in the long run. If possible, set up automatic payments. You can set your account to pay your balance in full each month, or if you’re taking advantage of a 0% introductory rate – consult your budget and calculate how much you’ll need to pay each month to ensure you pay your balance off by the end of the introductory period. And remember, any balance you carry over after your grace period or at the end of your introductory window will begin to accrue interest.
These tips aren’t just for the holidays, they can save you money year-round. Need additional support managing those credit cards? Consult our Credit Card Coach.
