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Prepare Your Credit Cards for Holiday Shopping

By U.S. News & World Report

It doesn’t seem like it can be that time of year already but — believe it or not — consumers around the globe will soon be breaking out their credit cards and getting started on holiday shopping lists.

There are many reasons to favor your credit cards over cash when it comes to holiday shopping. But in order to get the most out your purchases, you should also make sure your credit cards are in the best shape possible. After all, they are about to get a serious holiday workout. Here are a few steps to take to make sure your credit cards are fit for holiday shopping.

Create a budget. Although it’s important to have a shopping list ready and a general idea of how much you’ll spend, you should also create a holiday budget to make sure your spending doesn’t get out of hand. It’s easy to just charge everything without paying attention during the holidays. But after the holidays have passed, you’ll realize that you have spent hundreds of dollars more than you intended — or can actually afford. Nobody wants to go into the new year carrying a lot of debt.

[See: 8 Financial Steps to Take After Paying Off a Debt.]

Before the holidays are in full swing, figure out exactly how much you can spend on your credit cards and how long it will take to pay off those purchases. Remember that each month you have to carry over your credit card balances means more interest, which can devalue any rewards or benefits you earned using your credit cards in the first place.

Check your credit score. Before beginning your holiday shopping spree, it’s a good idea to check your credit score. Will using your credit cards cause your credit score to drop significantly? Take a look at your finances and credit cards and compare the amount you plan to spend to the amount of time it will take you to pay down those charges. If your purchases will max out your credit cards or increase your utilization ratio, a measure of how much of your available credit you’ve already used, you might want to work on paying off some of your debt obligations and paying down the balances you have to avoid a bigger hit to your credit. The amount of money you owe — which affects your credit utilization ratio — is the second most important factor in your credit score, according to credit score provider FICO.

[See: 10 Easy Ways to Pay Off Debt.]

Check credit limits. Make sure that you have a clear understanding of the credit limits on each of the credit cards you plan to use for your holiday shopping. This will not only help you avoid the embarrassment of going over the limit, but will prevent you from unintentionally maxing out your credit cards. If you plan on carrying your balances for a few months after the holidays, it will be more cost-efficient if the balances are low and manageable. Ideally, it’s best to pay your balances in full to avoid paying interest on your gift-giving.

Examine your rewards program. One of the most valuable perks of using your credit cards for holiday spending is the opportunity to rack up extra cash back, miles or other rewards that the card issuer offers. However, because of some quirks in many reward programs, the cards you carry and use may not be earning you all the rewards you are entitled to.

[See: 8 Ways to Maximize Your Credit Card Rewards.]

For example, if the majority of your holiday spending falls into categories, such as electronics or department stores, you should check to see which cards offer the most rewards for those types of purchases. Do you plan on taking a big family vacation for the holidays? Make sure you use a credit card that rewards you for your travel purchases. With new cardholder sign-up bonuses and different rewards programs, you could earn much more with a new card than with one you already have.

By sticking to a budget, knowing your limits and deploying rewards programs judiciously, your credit cards and credit score may come through the holidays unscathed. In fact, they may be even fitter than ever.

More from U.S. News

12 Habits to Help You Take Control of Your Credit

12 Simple Ways to Raise Your Credit Score

9 Ways to Save When Holiday Shopping With Credit Cards

Prepare Your Credit Cards for Holiday Shopping originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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