ATLANTA— Christmas is the time for giving and receiving gifts. But it’s also possible for consumers to build unhealthy amounts of debt on their credit cards, digging themselves in a hole that’s hard to come out of, according to Dr. Frank Ghannadian, associate dean of the Eugene W. Stetson School of Business and Economics of Mercer University.
“Enjoy the holidays, but don’t overdo it with credit card debt,” said Ghannadian, a professor of finance at Mercer’s Atlanta campus of the Stetson School of Business. “After Christmas bills can add up and lead to total bankruptcy.”
With a few tips to keep in mind when purchasing holiday gifts, consumers can still buy presents for their friends and loved ones without breaking their own banks, Ghannadian said. Here are some of those suggestions:
· When buying presents, it’s the thought that counts. “Buy gifts that you can afford and can pay in cash,” he said. “Or, buy gifts you pay off with certainty in less than six months. There will be another Christmas coming six months after you have paid off this year’s bills.”
· Advance planning and investments in time to research the price of gifts can pay off. Taking some time to look around can be beneficial with sales, specials and promotions. Some electronic goods are cheaper when you buy online.
· When you use your credit card because of convenience, deduct that amount from your balances in your checkbook immediately. “Making this deduction will prevent you from overspending, and you will be able to payoff your balance by the time your bill arrives,” Ghannadian said.
· Open a no- or low-interest, promotional credit card. If you know that you will be receiving a bonus or some extra money, such as a tax refund, in a few months, you may want to take advantage of a promotional card that offers six months at no or low interest. Just be sure to pay off the card when the money comes in.
Consumer credit-card debt has skyrocketed in recent years, with the national average for an individual’s credit-card debt hitting $2,748 last year, Ghannadian said. Many credit-card issuers only require customers to pay a monthly minimum of 3 percent of their balance, meaning it takes several years to pay off the debt.
“A credit card with a balance of $2,500 and an annual interest of 18 percent may require a $75 payment,” he said. “That would take the consumer 47 months to pay off the balance completely.”
Founded in 1833, Mercer University has campuses in Macon and Atlanta as well as three regional academic centers. With 10 schools and colleges, the University offers programs in liberal arts, business, engineering, education, medicine, nursing, pharmacy, law and theology. For 15 consecutive years, U.S. News & World Report has named Mercer University as one of the leading universities in the South.