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Tips For A Debt-Free Holiday

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Terry Boulton, senior vice president of Simsbury Bank, has some tips for how to have a debt-free holiday this year.

Tip #1:  Figure out how much money you have to spend.

  • Many people take advantage of holiday savings accounts that are available at their bank.
  • Many people dip into that account throughout the course of the year! Not a good idea.
  • If you don’t have one this year, you’re too late, but set one up now for next year. When you get that check (usually in November) it takes a lot of the stress off and is well worth the sacrifice.

Tip #2:  Beware of credit card debt! Especially store credit cards!

  • Many retailers offer better discounts when you use their charge card, and while the savings may be enticing at the time, remember that you may actually be paying a lot more for the items in the end with interest. Think the purchase through before putting it on a card.
  • Also, the rule of thumb is that for purchases under $25 it is best to pay with cash. For larger purchases that may offer interest free financing for a period of time, credit cards may be a better option, but again look out for late payment fees etc.  and be sure to pay the item off by the interest free period. Even if you are one day late, interest is then applied to the pay-off amount.
  • Be careful not to overdraft your account or bounce checks. If you have a concern that this could happen, it is a good idea to set up an overdraft protection account, or make sure that you keep a minimum balance.

Tip # 3: Layaway – is it worth it?

  • Layaway is making a comeback! Those who were smart enough to think ahead and put items on layaway while they were discounted, or even while some of the more popular items were available were smart!
  • This is also a great way to budget your dollars, but from a financial perspective make sure that in the end the purchase makes sense. Look closely at the lay away fees, also make sure that you make your payments on time and that you pick up and pay-off your layaway by the date on the paperwork, or the retailer will put it right back on the shelf!
  • Make sure that you don’t put convenience over cost.

Tip #4: Try to avoid ATM fees!

  • Banks large and small can help you avoid ATM fees. Large banks have their own ATM network, while most small banks belong to a network that gives their customers free ATM access at other banks.
  • Some banks offer relationship accounts that give you free ATMs if you have a high enough deposit and loan balance with the bank.
  • Plan ahead so that you don’t find yourself needing cash when there is not a free ATM nearby.

Tip #5: Allow technology to help you save time and money!

  • Use online banking, mobile banking or pay your bills online.
  • You can save the time of going to the bank by handling transactions electronically.

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