www.insideHALTON.com · OAKVILLE BEAVER Thursday, December 6, 2012 · 20 Making sure Christmas fervour doesn't turn into credit card debt T he risk of high credit card interest rates is a significant downfall from Christmas overspending. This is a perfect time to reassess your family's priorities. For many, the Christmas season is wonderful. It is the time of year to stop your normal routine and get caught up in the magic of Christmas. While it is a time to celebrate, it is also a time to be generous; but at what cost? Does the seasonal consumerism add or detract from the Christmas spirit? There are financial considerations to be made with the rush to buy gifts on credit. Credit cards are expensive. If you want to maximize spending on your family it makes little sense to use credit cards to finance that spending. We checked the website of two of the major banks in Canada and both listed the interest rate charged on credit card balances as 19.99 per cent. In an era of extremely low interest rates that is an exorbitant amount. This is not an issue for those who regularly pay down their credit card balance. Unfortunately many don't; especially after potential overspending at this time of year. Some will not have the ability to pay off all credit card balances. To put the cost of credit that is close to 20 per cent in proper perspective, we should compare that rate to other current interest rates. The same two banks that charge 20 per cent for credit card loans will pay depositors 1.2 and 1.5 per cent interest on their savings account. To state the obvious, credit card debt is extremely expensive. So what are the options? There are several. The best way to Cogeco Digital TV. Dollars & Sense By Peter Watson enjoy it Over 6,000 On Demand movies and shows1 Awardwinning customer service2 TV & Internet that don't interfere with each other Up to 150 HD channels 3 Learn more at Cogeco.ca 1-800-780-3525 Shop at our store in Oakville Place Available to Burlington and Oakville customers. 1. Cogeco On Demand service is offered where the technology is available and for customers who meet the Cogeco On Demand access requirements. Cogeco offers the most titles in its territories. Access to some content may require a subscription to the TV package containing the associated digital channel. Channel availability may vary per region. 2. Cogeco call centres have won the "Highest Customer Satisfaction" award in the telecommunications / TV category awarded by the SQM (Service Quality Measurement) in 2007, 2008, 2010 and 2011. 3. Cogeco High Definition service and programming requires the purchase or rental of an HD receiver. The number of available HD channels may vary per region. HD channels are available with the subscription to the equivalent channels in Standard Definition. Does your generosity of giving have to be done completely through commercial means? Children can offer to do chores for their parents. Adults can make a gift or write a poem that would perhaps replace or augment a less costly gift. A gift can be purchased in minutes while being more creative may take hours. Which is the more valuable gift from the perspective of the person on the receiving end? A starting point with gift purchasing is to have a budget. Prioritize how you want to allocate your resources. Holiday shopping is no different from shopping during other times of the year. Live within your means. If you do use a credit card make sure you pay the balance off before the credit card interest is applied. Unless there is a compelling reason, credit card debt interest should be avoided. The same person looking for the popular preChristmas sales and driving a great distance to save, may be negating their careful shopping pattern by paying 20 per cent interest on outstanding credit card. Christmas spending and people's kindness will continue. For many who celebrate Christmas or at least the holiday season, it is one of the best times of the year. Gifts are planned. We extend an extra effort to our family and friends. Retailers work extra hours and count on the weeks leading up to Christmas to bring in the bulk of the year's profit. That is good. What needs to be monitored is spending too much while being caught up in the enthusiasm of the season. Better to enjoy the holiday without realizing in the New Year you have caused yourself financial harm and wished you had been more prudent. The easiest way to avoid that financial harm is to ensure your Christmas enthusiasm does not spill over into a punitively high credit card interest rate. -- Submitted by Peter Watson, MBA, CFP, R.F.P., CIM, FCSI.