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How to use your credit card wisely this December

The Christmas spending season can raise questions about how to use your credit card. Here’s a quick guide on how to maximise the benefits from your credit card usage and lower your risk in the silly spending season.

Use your credit card like a debit card

The key to efficient, low-risk credit card usage this December is to treat it as a debit card. While buying presents and festive food and drink can quickly add up, having a debt hangover is not a great way to start the new year.

If you only spend what you can afford, but make purchases using your credit card, you can get your rewards points while still sticking to your budget.

If you can stick to good spending habits over the Christmas period, you’ll be able to start 2020 in the right way.

Don’t go overboard on presents

If you’ve left all your Christmas shopping until today, it can be easy to panic and spend more than you have in the rush of Christmas craziness. Good personal finance habits suggest you don’t spend what you can’t afford.

While you may literally have the money to spend in your account, it may not be wise to go all-in on Christmas presents. Consider setting a spending limit this year and use your credit card to benefit from those lower cost gifts.

The other option could be to look at a service like Afterpay Ltd (ASX: APT) to match your expenses to your income over the Christmas period.

Use Boxing Day sales to get your bonus points

This could be a game-changer and really good use of your credit card this Christmas. Many card providers offer bonus points for spending a certain amount within a few months of opening the card.

If you’ve just received a new card in November or December then Boxing Day sales could be a great opportunity. That’s not to say that you should overspend to get your bonus points.

The key here is that Boxing Day could represent a chance to stock up on items you need for the year ahead, while also meeting your card’s minimum spend requirements to cash in on the bonus points.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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