Summer is the prime time of year when people are soaking up the sun and doing a bunch of activities outside. But spending also increases during this time. It may be easy to spend more when you're not stuck inside all day, but if you're not careful, you could quickly max out your credit card limit. A higher balance will result in a lower credit score, which can affect your chances of future financial investments. This does not mean you have to become a hermit during the summer. If you're wise with your credit card, you can make sure you don't spend beyond your financial means. Here are a few ways to avoid credit card debt in the summer:
Ease off impulse buying
Vendors and retailers are out in full force when summer arrives. You could see pop-up shops from retailers and food vendors clamoring for your business while you're strolling down the street. As tempting as it may be to get a fancy bracelet from a store or pile up your car with fruit from the farmers market, avoid too many impulse buys. One purchase every now and again is fine, but if you use your credit card to buy everything in sight, your score will drop.
Avoid multiple vacations
Nothing is wrong with going on vacation during summer, but if you're not wise with how you use your credit card while on holiday, you could be in big trouble. Plane tickets and other travel costs can set you back, and you may be eating out more and buying souvenirs in the exotic locales you visit. Hold off on taking too many trips or find cheaper places to visit, such as a campground in your area or the local amusement park.
Find proper ways to finance home renovations
What better time of year to start a major home-renovation project than the summer? You don't have to worry about snowy conditions hurting your project schedule, and contractors may be offering deals during the summer. But don't open new credit cards to finance these projects.
Too many card applications can result in hard inquiries on your report. Your score will lower and other lenders may not want to do business with you if you have a lot of lines of credit. And if you're approved for any of these cards, you could raise your credit-utilization ratio and be paying back your debt for a long time.
Keep in mind you still have payments to make
Summer should be your time to relax, but don't forget that you still have a number of responsibilities. Getting too carried away with summer fun can cause you to forget about your financial obligations, such as making your credit card payments on time. Thirty-five percent of your credit score is based on making payments on time, based on the FICO credit score model and you could see your score drop and be charged a late fee if you forget. Do your best to remind yourself by either setting up a calendar alert on your phone or automatic payments with your bank.
Check out balance transfers and refinancing
High interest rates and expensive fees can make paying back your balance a bit harder. If your score is in a good place, you might want to consider a balance transfer or refinance. By doing this, you can move your current balance to a card with lower processing fees and interest rates.
But before you go about this, make sure you read the fine print of this procedure. Many transfers will charge you a fee, and some refinancing options only offer lower interest rates for a certain amount of time.