Good Habits to Protect Your Credit and Identity During The Holiday Shopping Season

Not only are the holidays bad for your diet, but the parties, decorations, baked goods, family activities and, of course, gifts, can all add up to a lot of spending making it bad for your budget too. To cover the gap or earn extra rewards, many people turn to their credit cards, but this year consumers are shopping scared and they’ve got plenty of reason.

Not only is it hard to stick to a budget or come up with extra cash to pay for holiday gifts and vacations, but in the past year, major retailers from Target and Macy’s to Home Depot have announced the discovery of malware hidden inside their credit card machines meant to steal personal or credit and debit card information from millions of customers. But you shouldn’t necessarily lock away your credit cards until the New Year.

Unfortunately, avoiding certain stores and locking away your credit cards until the New Year is not a reasonable strategy for protecting your credit score or personal data. With a few simple steps, you can use credit cards wisely this holiday season and make plenty of choices to better protect yourself from breach-related fraud and identity theft.

4 Steps to Protecting Credit Scores and Personal Information this Winter

#1 – Budget and Plan Before You Pay

First of all, don’t let your credit card spending get out of control this holiday season. While you may be able to earn rewards or spread out your purchases using credit cards, that does not mean you should automatically pull out the cards every time you go to purchase a gift or new decorations. The reason it’s so easy to lose track of credit card spending, for most of us, is that the money is not coming out of our checking account, so we spend more than we think we will.

Make a list of all the people you have to buy for and set a budget for how much you intend to spend over the season. Make a habit of checking your list and thinking twice before you buy another gift for your mom, your spouse or child. Is the gift you are about to buy something that you planned or is it just a last-minute, impulse purchase? Referencing your list can save you from expensive, underappreciated last-minute purchases.

Maxing out your cards or even getting anywhere near your credit limit to cover the cost of extra purchases is a bad idea. Credit card utilization rates — the amount of credit you use versus how much credit is extended to you — accounts for nearly a third of your credit score. This holds true even if you religiously pay off your credit card balance in full, the credit report snapshot might show a high balance before it is paid off, which could negatively impact your credit score.

You may even consider leaving your credit cards at home during the holiday season, unless you are going on a planned shopping trip. Stores are great at getting you to buy extra junk you don’t need with tempting displays and pretty endcaps. If you don’t keep your cards with you, you’ll be less likely to buy things you weren’t planning to buy in the first place AND avoid opportunities for thieves to steal your credit.

#2 – Leverage Rewards with Care

Many credit card companies roll out extra rewards during the holiday season. Get extra money back for each purchase, 10% or 15% off in stores, or maybe you’ll even be able to jump that insane line on Black Friday. One of the best ways to get more bang for your buck is to leverage these rewards from card companies or retailers, however, you must use caution to avoid damaging your credit score or opening yourself to identity theft.

Applying for and/or opening a bunch of store credit cards still affects your credit score, whether you utilize the cards or not. Each application is noted as an inquiry and can cumulatively have a noticeable effect on your credit score. Make sure the rewards will outweigh the benefits (when opened and paid down properly, these cards may even help your credit score). If you can, review your card options with your trusted financial advisor to choose the best ones for your shopping habits and credit needs.

To get the best deals or use your credit card rewards to your advantage, apps such as Apple Pay, Google Wallet and Wallaby can track the rewards offered for each of your credit cards – even the ones with rotating categories – then alert you to your best options for savings or rewards at the time of purchase.

Most of these mobile apps do not store your sensitive data so you shouldn’t have to worry about someone stealing your card numbers from the app, but you will want to take basic precautions like creating passwords to prevent someone from accessing your main screen, apps or other personal information from your mobile device if it is lost.

#3 – Don’t Wait Until the Last Minute to Shop

One temptation with holiday shopping is to put it off until the very last minute. If you do this, you will have likely missed most of the good deals and are apt to spend more money than you intended. Stick to your list and try to finish shopping at least two weeks before the holidays. This will help you avoid high prices, last-minute shipping fees or impulse buys.

#4 – Monitor Your Account Activity Daily or Weekly thru January

Be sure you keep careful tabs on what you’ve spent and on what you’re still planning to spend. Not great about writing down your transactions? Use an app or website that links your cards to track spending for you.

Check in with your holiday-related spending everyday (if you can) or on a weekly basis during the holiday season. If you are doing this regularly, you can immediately spot an unauthorized transaction, call your card carrier to put a stop to payments and prevent further damage.

Other ways to watch out for fraud include setting up transaction alerts through your bank or credit card issuer, that way you don’t have to log into your account every day, you just receive texts or emails whenever your card is used or when a transaction above a certain dollar amount needs to be authorized to ensure it is you making the purchase.

Petty thieves are quick and many of us carelessly leave our personal belongings out in public. Here are three ways to keep track of your credit and debit cards in your wallet and online:

  1. Do not leave cards lying around in your car.
  • Try not to make purchases over the phone where someone might hear you give your card number or personal information.
  • Do not save your credit card information to websites. Your lost phone or a data breach on the website’s side could easily expose your saved information.

The act of getting out your credit card or entering the information manually every time you make an online purchase may save you from identity theft or credit fraud. Be sure to check your wallet or purse for each credit card when you come home. You may also track your credit scores on free sites

like Credit Karma for a sudden drop, which may indicate someone is using your credit card or identity to run up balances in your name.

Protect Yourself from Budget Blowouts and Identity Theft All Year

Data breaches are likely to happen, as consumers we can only control our spending and online habits. Budget and track you’re spending over the holidays to keep from over using your credit and catch any fraudulent activity as soon as possible. As long as you are paying attention, you should be able to protect yourself from financial damage in the event you over spend or your information is compromised.

Don’t let bad credit habits and data security worry you this holiday season, but make sure you are making smart choices to budget and protect yourself, making the holiday season more relaxing and enjoyable for everyone.

Skip to content