Home > Credit Score > 5 Dangers of Black Friday Shopping

Comments 1 Comment

Black Friday is the most anticipated, but potentially dangerous, shopping day of the year. As millions of Americans head out in the wee hours of the morning following traditional Thanksgiving Day festivities, many are unaware of the credit dangers that await them.

Here are a few important Black Friday credit perils you can avoid.

1. Identity Theft

Holiday shoppers aren’t the only ones who anxiously await Black Friday. It is also the optimal playing field for thieves looking for marks among the estimated 37% of adult shoppers who partake in the day’s festivities. Criminals might use easily concealable skimming machines to retrieve data from credit cards. Others may pose as charities, and steal identities by obtaining card numbers or other information that they convince donors to disclose, such as a Social Security number, driver’s license number or bank account information.

Be vigilant about monitoring your accounts. If you must use a credit or debit card, and you notice any suspicious activity, immediately notify your financial institution and the credit bureaus that your identity has been compromised, and shut down your account. You can also monitor your credit score for changes using free tools — like Credit.com’s Credit Report Card, which also gives you an overview of your credit profile.

2. Increased Debt

In-store promotional offers can be irresistible. In an effort to take advantage of what appears to be the deal of a lifetime, many shoppers will go to extreme lengths, even if it means waiting in long lines to secure an item that they can’t afford in the first place. If you pay for it using credit and carry a balance (rather than paying it in full), the debt will continue to pile up — especially if you’re caught in the minimum-payment trap — and you may end up paying more than you bargained for.

3. Store Credit Card Offers

On Black Friday, retailers may try to entice consumers into signing up for a brand spanking new piece of shiny plastic in exchange for a discount on purchases made that day, a free gift or an introductory 0% APR. However, store credit cards carry interest rates (once they revert from an intro APR, if offered) that are higher on average than that of standard credit cards. They can still be a great option for consumers, but if you carry a balance, a credit card with a lower interest rate may be a better choice.

If you apply for a retail card with a 0% introductory offer, maximize the offer and pay the balance in full each month to avoid being inundated with additional debt caused by the interest rate. Since many store credit cards are accompanied by a low credit limit, carrying a balance on the card could lower your credit score as a result of using a higher percentage of your available credit.

Also, carefully examine the fine print to ensure there are no dormancy fees because the card may not be worth it if you do not plan to use it after the initial purchase.

4. Overdraft Fees

If you head out for a morning of Black Friday shopping planning to use debit cards to keep the credit card debt from piling up, kudos to you. However, if you fail to properly budget your available funds, you may be at risk of overdrawing your account. Overdrafts can result in non-sufficient funds fees, which are on average $28 per transaction. Even if you have a connected savings account with sufficient funds to cover the overdraft amount, you may still incur fees.

5. Damage to Credit Score

If you already carry a higher amount of credit card debt before indulging in Black Friday offers, and you charge more than you can pay off in the next cycle (and especially if you max out your credit), you can end up with a drop in your credit scores. Keeping your balances at no more than 20% of your available credit will leave you with healthier credit scores. Applying for new credit around this time will also result in a small, temporary drop in your credit scores.

This is an especially good time of year to start monitoring your credit if you haven’t already. That way you can look out for signs of identity theft, and become more aware of how your spending habits affect your credit.  You can get your credit reports for free once a year from the three major credit reporting agencies – check them to make sure there are no unauthorized accounts or erroneous information.

Tips for Facing Black Friday

Searching for ways to avoid the credit dangers of Black Friday?

  1. Establish a budget that works for you. It should be based on the disposable income you have accumulated throughout the year.
  2. Plan ahead. Make a shopping list of the items that your spending plan can withstand.

Happy shopping!

Image: George Doyle

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team