How to Enjoy Summer and Not Ruin Your Credit

The kids are out of school for the year, the sun is shining and you’ve got time off coming up.

Yes, it’s summer – and aside from the above, the season is often synonymous with family vacations, festivities surrounding the Fourth of July holiday, and projects around the house and yard. Summer is also often synonymous with spending money. After all, now that the weather has turned for good, you can actually get outside and do things with your family and friends. But any spending done this summer (or really any time of the year) should be done so responsibly, as splurging can really cause your credit score to take a hit. Free spending is arguably more common in the summer months than at any other point of the year. Here’s a look at how to keep it in check:

How to Enjoy Summer Without Ruining Your Credit

• Don’t charge vacations: Ideally, you should be saving for any planned vacations so you don’t have to worry about paying them off in the days that follow it. Some other ways to finance a family vacation are to cash in any rewards points with credit cards, airlines, hotels, etc. to help ease the cost burden. You can also use your tax refund to put toward it.
• Keep your credit utilization ratio within 30 percent: Charging big things like family vacations, new patio furniture and landscaping supplies cause your total amounts owed to increase. This, in turn, can affect your credit utilization ratio, which is essentially your debt-to-credit ratio. If this is higher than 30 percent, your credit score will take a hit. For example, if you have a credit card that has a total credit limit of $10,000 and you have $4,000 worth of charges on it, you have a credit utilization ratio of 40 percent, which will negatively impact your credit score. In other words, charge wisely!
• Charge to maximize rewards: Most credit cards today offer bonus reward points toward certain purchases or when you’re shopping at certain stores. Be sure you’re familiar with these bonus reward opportunities and use your credit card to maximize them.
• Focus on frugal fun: Not much in life is free anymore, but there are ways that you can cut summer activities costs and still have a great time – whether you’re bumming around town or are on a family trip. If you’re on vacation, try to stay away from over-priced tourist trap activities and instead focus on the unique activities and features that make the area unique. Also, be sure to take advantage of what nature provides, like beaches, lakes, parks, etc.
• Have a potluck party: Is it your turn to host the annual Fourth of July party? Instead of absorbing all of the food and entertainment expenses yourself, why not start a new tradition with a potluck party. You can still provide the main course, but all of your guests will help out by bringing drinks and other dishes. Potluck parties are still a blast, and they won’t have you stressing about paying off a sizable balance in the future.
• Don’t underestimate sweat equity: Need a new deck? Want to freshen up the landscaping in your yard? While some of this work is better left to professionals, you can still likely save significantly if you can complete some of the preparation or cleanup of big yard projects yourself. This can make big projects much more manageable to stomach, cost-wise.

So don’t stress about money or your credit score this summer. Just make sure that you’re not biting off more than you can chew, regardless of how you’re spending.