The holidays are coming up and no doubt you’re collecting your gift lists. Wondering how you’re going to pay for all of those presents? The first step in getting ready for holiday shopping isn’t in deciding what you’re going to buy but how you’re going to buy it. Follow these steps to be sure your credit is ready for the holiday spending spree!

Pay off Your Balances

Before you get the credit cards out of your wallet to pay for your purchases, make sure that you’ve paid down your current balances. Many people don’t know that if you carry a balance more than 30% of your limit, it hurts your credit score. Credit cards report to the bureaus at the end of the month so get your balances down before you charge more.

Set a Budget

Your holiday budget can be set in different ways. Set an entire budget, set the limit you will spend per person, or utilize both methods and you’ll be sure not to be broke by the time the holiday season is over. You can also set a budget for high dollar items. For instance, if your daughter wants a new television for her room, set a specific budget for the television and choose one that falls in your price range.

Increase Your Credit

If you’re looking for a new credit card, now is the perfect time. Many credit card companies take advantage of the holiday season by offering excellent introductory rates on their cards. If you can get a card with a 0% APR for the first year, you can use that card and pay off your debt without paying hefty interest rates. If you’re not shopping for a new card, contact your current card companies and ask about increasing your limits.

Watch Your Cards

Identity theft and credit card fraud occur more frequently during the holiday season. Keep an eye on your credit card statements and be alert to any signs that your card has been used without your authorization. If you notice any unusual charges, call your card company immediately to report it.

Skip the Cards

One of the best ways to protect your credit this holiday season is to skip the credit cards all together. Many banks and credit unions offer holiday savings accounts. These accounts allow you to put money in but not make any withdrawals until a set date. If you start putting money away now, you’re sure to have enough cash on hand this holiday season.

Smart shopping habits and common sense credit practices will help ensure that you don’t ruin your credit this holiday season. Set a budget and use your cards wisely! Holiday spending doesn’t have to mean being broke in January!

Author Thomas Hathaway is a financial consultant and suggests there are times when a payday loan may come in handy when you have financial urgency prior to your regular pay date.