The biggest shopping day of the year is just around the corner. If you plan to partake in Black Friday savings, it’s important to consider your credit score along the way. Overspending can lead to inflated debt, loss of savings and even credit score damage. Use the tips below to avoid these issues and keep your credit score in fighting form.
1. Establish a non-negotiable budget.
Black Friday is a consumer free-for-all, and it can be tempting to adopt the same laissez-faire attitude about your own shopping. Be warned: credit scores are not holiday-exempt. Spending too much will increase your credit utilization ratio and overall debt, putting you at risk for credit score damage and financial vulnerability. The fix: set a budget before venturing out. A bottom line will help you keep your costs low and understand when it’s time to stop shopping.
2. Plan ahead.
A list is a lifesaver on Black Friday. In addition to planning your budget, it’s important to construct a game plan to help you save money. Make a list of the items you want to buy and organize them by store. Clip coupons ahead of time to make your savings greater (visit http://blackfriday.com for the latest ads). The bottom line: Savings are achieved by those who plan. Don’t go in empty-handed.
3. Stay home.
Stores are equipped with plenty of online deals that don’t involve waiting in line or fighting the crowds. Avoid the mob mentality by shopping from the comfort of your laptop.
4. Don’t forget the warranty.
A deal is only as good as the fine print. If you are in the market for a new flat-screen TV, be sure it comes with the same warranty as the full-price models. Don’t allow your love of a sale overrule common sense.
5. Take advantage of technology.
Retailers are dying to outdo one another on the biggest shopping day of the year. Take advantage of their motivation with your smartphone. Before buying that new flat-screen at Best Buy, look up the price for the same model at Costco. Ask the store manager to match the price if you find a better deal.
6. Use your credit card wisely.
Credit cards should be used carefully on Black Friday. High interest rates mean paying more for items over time and cancelling out those deep discounts. If you must charge:
- Utilize zero-interest. Department stores usually offer some sort of zero-interest financing, so be sure to ask about your payment options.
- Remember credit utilization. Your credit utilization represents the amount you owe vs. your total credit limit. Keep your credit healthy by never spending more than 25 percent of this limit—both individually and cumulatively. For example, if your Visa credit limit is $4,000, stop charging when you hit the $1,000 mark. If your MasterCard has a limit of $8,000, stop spending at $2,000. Be sure to combine these debts to keep your cumulative ratio under 25 percent as well, e.g., $1,000+$2,000/$4,000+$8,000=$3,000/$12,000=25 percent
- Stick to the budget. A high credit limit is not a license to spend. Use your credit cards as a tool, not a crutch. Stick to your budget and establish a plan to pay off your Black Friday purchases as soon as possible.
7. Think beyond the holidays.
The majority of Black Friday shoppers are focused on Christmas, but that doesn’t mean you can’t take advantage of other deals. Walk through your home and take an inventory. Do you need a new washer and dryer? Why wait until next year when you’ll be paying full price? Consider adjusting your budget to include necessity purchases that extend beyond the holidays. This strategy could save you big bucks in the long run.
8. Avoid enablers.
While one friend will talk you out of a big purchase, another might say “Go ahead, today is supposed to be fun!” Black Friday is not the day to spend time with your enabler friends. Stick with a buddy who shares the same financial philosophy. Goals are maintained with a strong support system.
As we’ve said before, everything is negotiable. You may not score any haggle deals at Target, but car dealerships and furniture stores are another story. Polish your oratory skills and strike a bargain.
10. Maintain your perspective.
Budgets, plans and savings are only effective with the right perspective. If you find yourself making excuses, e.g., “Who cares if I go $150 over my spending limit?” it’s time to take a step back and reexamine your priorities. Few people “need” the items they purchase on Black Friday, and you are probably no exception. On the other hand, you do need emergency savings and a good credit score to keep your finances in control. Don’t sacrifice the important things for temporary thrills and expendable items. Respect your priorities and put your safety first.