Many credit card users will pay through the nose this holiday season. They’ll spend months, maybe even a year, paying for this holiday cheer. They will impoverish themselves and help make card companies more profitable.

Why? doesn’t want you to be one of them. We want you to be a sagacious cardholder who makes money on his or her cards, not someone who overpays for plastic. So what is the difference between a sage card user and a chump?

Make the Card Companies Pay or You Will

A sage holiday traveler makes credit card companies give him or her the best deals. They are grabbing every discount, rebate and frequent flyer mile, then demanding more. They can get away with it because they are very good customers.

What is a good credit card customer?

He or she pays off card bills each month. So the sage cardholder makes the card company provide a zero percent, short-term, loan every month.

But a chump overpays. That’s what card experts warn. A new report based in part on a Harris Poll documents how holiday travelers paid for trips last year and how some will overpay this year.

They will charge on average some $1,456 for holiday trips, but take months paying for them partly because they carry 15 percent or more in interest, according to NerdWallet’s 2018 Holiday Travel Report.

For instance, at 15.5 percent interest, taking a year to pay off that $1,456 bill will come to $1,578, about $122 extra going to the card issuer in interest. This is self-destructive, says a NerdWallet official.

“Reaping the full value of your credit card rewards is only possible if you’re consistently paying off your balance,” according to Joe Cortez, a NerdWallet travel rewards analyst.

Don’t Dawdle Paying Holiday Bills

On average cardholders will take 2.2 months to pay those bills balances—the average payoff time for 2017 holiday travel expenses, according to the report. Some five percent of holiday travelers using cards are taking a year to pay off their cards and also paying a hell of a lot of interest. That is counterproductive.

“While earning points and miles can lead to free or discounted trips, expensive credit card interest rates can act as a boat anchor to your rewards and quickly drag their value down,” Cortez adds.

Why are people unnecessarily adding to their holiday bills?

A Long Island adviser says cardholders who overpay don’t plan for holiday spending.

“Have a budget for holiday traveling and stick to it,” says Charles Hughes, a certified financial planner in Bay Shore, New York.

“With interest rates these charges on credit cards are becoming more and more difficult,” he adds.

Hughes advises those with several card debts to pay off the highest interest cards first. But, most importantly say card experts, understand what you are doing when you get and start using a new card.

Are You Falling for the Card Hype?

Cortez says some cardholders are “falling for the hype of a credit card. Is it for the rebate dollars or for the airmiles? You must know how you will use them.”

Compounding the difference between the chumps and the champs, say card experts, is that those paying off each month have higher credit scores than the chumps carrying card balances from month to month. That can be very important. The latter pay higher interest rates while the former get the best offers. These include zero percent deals and cards with all sorts of bonuses.

Many of these sage card users, who are saving hundreds of dollars a year, also use other tricks to obtain big discounts (Please see note: “Smart Card Tricks”)

Card Rules One and Two and…

Pay off holiday card balances immediately, writes Elizabeth Renter, the author of the NerdWallet study.

“Slightly more than one in five (22%) Americans,” she writes, “who put holiday travel expenses on a credit card did exactly that.”

Note: Smart Card Tricks

Don’t let card companies take you to the cleaners this holiday season. Be a sage cardholder.

But how?

Smart card users constantly demand better deals and usually get them, card experts say.
That’s because card issuers are in a very competitive business. They are constantly looking for new customers and fearful that someone will raid their customer base. So many card companies offer deals once or twice a year.

Applying for a new card five months or so before your trip allows you to use the biggest rewards toward your travel costs.

“So, for December travel, applying for a new card in July would allow plenty of time to receive the card, hit the minimum spending requirement for any bonus, and book your flights well in advance,” according to a NerdWallet analysis.

A new cardholder now may have to wait to reap their bonuses, but holiday spending could help reach minimum spending requirements.

Another way to reduce travel expenses is using a travel rewards card along with an airline or hotel loyalty program. This can be a very effective card strategy, card experts say. It can, they add, double or triple rewards.

Gregory Bresiger
Gregory Bresiger

Gregory Bresiger is an independent financial journalist from Queens, New York. His articles have appeared in publications such as Financial Planner Magazine and The New York Post. The eBook version of his latest book "MoneySense" is available now for Free Download by clicking HERE

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