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Keeping Your Credit Healthy After Holiday Spending

posted on Wednesday, December 30, 2020 in Education

image of couple looking at bills

It's easy to let your credit get out of control during the holiday season, focus on the facts to try and keep your credit score in the clear. 

Holiday Spending - Good News 

  • 33% of people planned to spend less 
  • 9% of people planned to spend more than in 2019 

Holiday Spending - Not Good News

  • 57% of cardholders who are already in debt were willing to dig deeper into debt for the holidays

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Credit Score Impact

1) Pay Your Bills On Time

When paying off your debt, try to pay more than the minimum on your card balance as soon as you can. 

Let's say you have a credit card balance of $2,500 and 16% APR. 

Example 1 example 2 example 3
Monthly Payment $75 $100 $150
Term to pay off 45 months 31 months 19 months
Total Interest $829 $562 $327

These scenarios show that the total interest drops as does the time to pay off your card as you incrementally increase your monthly payments.  Pay off as much as you can, and make sure you pay on time! 

2) Credit Usage

Try to stay in the 10% to 30% range by making multiple, smaller payments on your balance throughout the month.  A high utilization ratio will lower your score. 

3) Say No To Store Cards 

Though it may be tempting, don't accept the offer to "save 20% if you open a store card right now!" Doing so will place a hard inquiry on your credit report which will cause a drop in score (on average 1% - 2%). 

Protect and Manage Your Credit with Credit Sense. 

You can access your credit score* along with personalized tips on how to improve or maintain an already great score with Credit Sense. It's built right into your Northwest Bank Online and Mobile Banking App, so you won't need a new login.

*Know Your Score Today!

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