Holiday Spending: Beware of the Dangers
A recently released financial report provides stark insights into current financial realities as we head into the holidays this year ...
The report, a collaboration between PYMNTS and LendingClub, states that:
- 79% of their survey respondents said they will be shopping during the 2022 holiday season. That's nearly a 9% drop from the 88% that shopped last year
- Roughly 40% of those holiday shoppers will use financing tools of some sort (credit cards, personal loans or buy now, pay later (BNPL) options) to put gifts under the tree
The statics concerning the use of financing tools ... credit ... is cause for real concern. I've addressed this specific concern in prior posts, but my message bears repeating given the rising numbers of those considering credit as a means of paying for their holiday expenditures.
Credit and financial "dangers" lurk
everywhere while Holiday Shopping!
And as a loan officer, I've seen these dangers manifest themselves negatively way too often (even once is one too many). I know for a fact after viewing many mortgage applicants' credit reports and banking account(s) that:
Holiday-related expenditures can (and have) contributed directly to applicants' ongoing financial and credit challenges. Both their credit reports and bank accounts provided spoke to that being so. The accounting reads like a timeline of their spending activities and credit actions.
Whether it was overspending, spending dollars they really didn't have, opening new credit to take advantage of discount offers, or more, they did damage to some degree to their finances, credit, and options for mortgage financing and home buying. As holiday shoppers, they didn't guard their credit or protect their finances.
So how do you avoid the same fate when you shop?
Just say "NO" to overspending and new holiday credit offers unless one of the following applies:
- Your Credit/Credit Score can withstand a new credit inquiry
- You can handle the new debt caused by the new card
- You can make monthly payments on time, consistently, and faithfully
- You will NOT be making application for a mortgage
- You are NOT already in the mortgage process
- You are NOT hoping to buy a home in the near future
- You are NOT maxed out on present credit cards
- You have NOT already applied for other stores/credit cards
- You know ALL the terms of the new credit account associated with the offer
- You know what other credit obligations you have and the total of ALL your debt
- The "enticement" offer is so valuable it offsets the negatives of taking on more debt
- You have NO credit history and are trying to establish one for a future home purchase
- A budget: What is the total dollar figure you have to work with?
- Names: Who will you want/need to buy gifts for?
- A Breakdown: How much of that allotted budget will you spend on each individual gift recipient?
- Gift Ideas: What ideas fit the planned expenditure for each gift recipient?
Are you hoping to Construct, Buy, Refinance or Purchase a home or investment property in Chicagoland or somewhere else in Illinois or Wisconsin?
Looking for mortgage financing answers, options, solutions, and experienced assistance?
Contact me! I'll put my 40 years of Mortgage experience and expertise hard to work on your behalf.
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