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Use Credit Wisely During Holidays

Holiday shopping brings out the kid in us, but 13.6 million of us kids are still paying for last year's holiday shopping, says a Consumer Reports survey.

Bill Hardekopf, CEO of LowCards.com and author of "The Credit Card Guidebook," says when you can't pay off credit card balances in November, don't add to it in December.

Here are some tips from Hardekopf on making it through the holiday season without credit headaches.

Overjoyed, overdrawn: Verify credit card limits before shopping. Getting too close to credit limits increases debt utilization ratios, a major component of credit scores. Holiday shopping costs even more when credit scores drop and credit card interest rates go up. Keep debt utilization less than 30 percent of the limit.

Squirrel it: Save now for January card bills. When still paying off last year, reduce spending this year. Use credit cards only when debt can be paid in three to six months.

Balancing act: When carrying credit card balances, seek the lowest rates possible. Contact issuers and ask for lower rates. Shop for cards with lower rates or longer introductory periods that allow balance transfers and charge zero percent for 12 months. When transferring balances, pay attention to transfer fees and don't use them for recent purchases. Pay credit card bills on time each month.

Holiday shopping benefits: If paying off bills each month, carrying no balance, earn extra cash using your credit card for holiday shopping.

Pay attention to partner programs. Most credit card issuers have partner programs offering discounts or bonuses for online buys with certain companies. This varies by issuer, but "partners" might be stores you use already. Discover turns $20 rewards into $25 gift cards. Citi gives an additional 1 percent to 5 percent cash back for shopping their online partners.

Rewards points: Use these to buy gift cards -- American Express Membership Reward points to shop Amazon.com to pay in full or for part of your purchase.

Five percent rotating cash back offers: Chase Freedom, Discover More and Citi Platinum Select offer an attractive 5 percent back on "designated category spending" for a specific amount of time. The October to December bonus categories for these issuers focus on shopping and entertainment. Sign up for these rebate offers each quarter.

Spending bonus opportunities: Discover More and Chase Freedom offer $100 spending bonuses for new applicants who reach a set spending limit ($500 in three months for Discover More and $799 in three months for Chase Freedom).

Extended warranties: Credit cards provide extended warranties and purchase protection. Many issuers refund the price difference when customers find lower prices on the same items from the same manufacturers within designated time periods, typically 60 days.

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