How to Use Your Credit Card During the Holiday Season

Drew Tsitos, Navy Federal’s Manager of Credit Card Products, shares tips on how to make the best use of your credit card during the holiday season and how Navy Federal’s newest card may complement your lifestyle perfectly. 

Transcript

[THEME MUSIC] EMILY BIGHAM: Hi. And welcome to the podcast MakingCents brought to you by Navy Federal Credit. I'm your host, Emily Bigham. And each week, I'll be taking your questions to the experts to help you make sense of your money, pun intended. 

Hey, Drew. Thanks for coming in today. 

DREW TSITOS: Emily, good morning. 

EMILY BIGHAM: Good morning. So, Drew Tsitos, you're the manager of credit card products at Navy Federal. So your team leads acquisition, new product development for all of our credit cards at Navy Federal. So yeah. I heard that you have some big news today that you want to talk about. 

DREW TSITOS: We do. We've just launched our new cash rewards plus product that offers unlimited 2% cash back to all of our members on all their everyday purchases. it's, I think, an elite club in the credit card universe. The 2% is the magic number that everyone's trying to get to. And there's only a few on the market. So we're very proud of that product. 

EMILY BIGHAM: Nice. So you said there's a few out on the market. What makes the 2% card at Navy Federal different from the others? 

DREW TSITOS: So Navy Federal as a credit union, we are able to pass back a lot of our savings through lower fees, no fees in a lot of cases, and then lower interest rates. Again, it also doesn't have any caps. So a lot of cards out there, you'll find they'll have spending caps and then you'll earn a lower rate. The cash rewards plus card is 2% flat. And that's on all of your spend every day. And it doesn't actually hinder your ability to earn those valuable rewards. 

EMILY BIGHAM: Great. So was the timing particular? I know we're coming up to the holiday. Big holiday spending. Was this something that you guys planned? 

DREW TSITOS: It is. Yes. So we've been talking about how we provide additional cash back value to our members. We know that that's something that's very important. Cashback is something that you can use to spend during the holidays. Right. And so getting this out before the holidays was really a very important thing for us. And I think it's a great way for members to maximize kind of that spending that's going to happen naturally. They can earn that 2% back. So for every $100, it's $2. So it stacks really, really quickly. 

EMILY BIGHAM: Nice. So let's talk a little bit about maximizing value. So do you have any tips for members that are going to be spending a lot this holiday season but they may be a little bit worried about getting into too much debt or they're just concerned about the economy going forward? Spending tips? 

DREW TSITOS: Yeah. It's a great question. I think it's something that a lot of people are interested in and might struggle with is how do I think about purchases that might put me over my comfortability with spending. And so I think there's an opportunity for folks to sit down and develop a budget. I think that will really help you with your holiday spending. We don't want to overextend when we don't need to. Obviously, the holidays are a time when we love to give back to our family, our friends. 

And so sometimes we do have to overextend a little bit. That's where it's important to look at rewards and then fees and make sure that you're paying those minimums. There's something for everybody. A lot of times you can find intro APRs, which are you'll pay a 0% or some lower rate for a duration before it goes back to your contract rate. That's in addition to earning the 2% unlimited cash back. So you can find that if you're looking for it. And I think it's something that a lot of people will find value with. 

EMILY BIGHAM: So let's just break that down a little bit because I think you said a lot of things here. You're a credit card expert, so it's very easy for you to talk about these things. So let's talk about what offers that members should be looking for out there in the market. So you mentioned 0% APR. So that is 0% on your rate, right? And should you be looking for a certain amount of time, like what-- explain that a little. 

DREW TSITOS: That's exactly right. So your typical credit card today is earning at about 30% based on the current rate landscape in the United States. And so you can a lot of times find when you open new cards a rate that, for some duration, is lower than that. It'll be 0% you pay no interest as long as you're paying your minimum payment on that balance. You can find them for 12 months or even longer in some cases. And so that's a really powerful tool for making sure that you have the spending power available to you without kind of overextending. 

EMILY BIGHAM: So what happens when you reach that expiration like the 12 months or 15 months? What happens there? 

DREW TSITOS: Yeah. So once that period ends, you go back to your contract rate, which would be whatever is assigned to you right when you applied and were approved for the card. In a lot of cases, again, that can be as high as 30%. At Navy Federal, our rates are capped at 18, which is great. It's lower than the industry average. And so if you're getting that 0% and then it moves back to your contract, there's still a lot of savings to be had there. 

EMILY BIGHAM: So what else should members be looking for in, I guess, a promotion or a credit card special? 

DREW TSITOS: Sure. So again, I think there's a couple of things. You can find specific merchant discounts on a lot of these things. If you're a fan of shopping at specific merchants like Amazon, or Walmart, wholesale clubs, things of that nature. There's a lot out there. So, for example, right now at Navy Federal on some of our products, we offer a Amazon Prime benefit where we would reimburse you for that annual subscription. The same is true. We have something with Walmart Plus. And so if you're looking for it, a lot of times you can find something tied to a specific merchant. But also, in addition to the cash back, there's then also the APR intros that we talked about. 

EMILY BIGHAM: So are those available on all the cards or is it sort of specific? I know Navy Federal has a suite of cards, but is there one that's better for one shopper over another or how would you-- how would you like shop different cards in that space? 

DREW TSITOS: Yeah. So I think it comes down to what you are looking to do with your spending. So if you know that there's going to be purchases that you might not be able to pay off in full, it might make sense for you to look for an intro rate or some kind of lower rate product in lieu of rewards. 

A lot of times-- we all are guilty of this. We get really fascinated with the rewards. It's an exciting game to play. But in a lot of cases, that lower rate can really help you provide more value. Now if you're comfortable paying off those balances each month, that's where rewards really come in. There's a benefit to be had. It will help you get that cash back to then use for additional purchases and additional gifts during the holiday, for example. 

EMILY BIGHAM: So something something you said sparked this in my head. I think we're going to be seeing a lot of the buy now, pay later. Is that something that Navy Federal is ever going to offer or how do you feel about those? 

DREW TSITOS: Yeah, buy now, pay later is a hot topic right now. You see it from a lot of up and coming players. A lot of traditional banks and credit unions are offering it as well. It's something we're constantly evaluating. Currently, we don't offer that service, but it's something we're thinking about as part of the package of value that we give back to members. The 2% cash back card, the Cash Rewards Plus, is kind of the start of that kind of value realization that we're going through. And so I think there's some exciting things coming in the next couple of months as it relates to rewards and things that we're really focused on. 

EMILY BIGHAM: There are some financial institutions where if you have a large charge on your credit card, you can plan it and then for a certain amount of interest, for a certain amount of months, you can pay it off. Are those good for the consumers? Is that actually a good way to go about it or is it better just to try to pay it as you go and maybe if you revolve, you have the higher interest rate? 

DREW TSITOS: Another really good question. I think, again, it comes down to your situation. The nice part with some of those pay it, plan it type of offerings is that it's a fixed payment every month so you know exactly what you owe. Some of the downsides, I think, are that it doesn't provide you as much flexibility as, say, a credit card. 

A credit card in a lot of ways evolves with you. So, again, as long as you're paying the minimum on those cards, you'll be in good shape as it relates to your credit score and be in good standing. We always recommend that you pay over the minimum if you can. That will help your stay out of that debt snowball that can happen sometimes where those balances start to creep up more than what you're paying. So again, we always recommend paying in full. If you can't pay in full, at least pay the minimum. 

EMILY BIGHAM: Yeah. So that snowball, it just reminds me of-- it reminds me of winter holiday shopping. And we have the highest balance of consumer credit card debt that we've ever had. 

So we talked a little bit about the repayment strategy. What are some ways that you can use a credit card as a way to pay off your debt? 

DREW TSITOS: Sure. So I think this is a really good question for actually even after the holiday season. A lot of times, again, we might overextend a little bit during the holidays, which is totally natural. And all of us do it right. Again, we're excited to celebrate those around us. And what happens is then we've accrued this big balance and maybe we get into that situation where we're not sure what to do. That's where a balance transfer I think can be really beneficial to people. A balance transfer is essentially where you take a balance from an existing credit card and you'd move it to a different institution. Right. 

Generally, with those transactions, there is a fee tied to them, usually in the range of 3% to 5%. So say you move-- for every 1,000 you move, that'd be $30 to $50 that you're paying just upfront on top of them, whatever the interest is, on that new balance. 

At Navy Federal, we do a lot of zeros. And we actually don't have-- 0% that is. And we don't have balance transfer fees. So when you move the balance in, you just start paying at that new rate, which could be zero. And then you don't pay any fee. So it's a good way also if you have debt on three, four, or five different cards to consolidate onto one and now you're making one payment instead of three, four, or five payments. 

EMILY BIGHAM: That's really smart. So I love to talk about multiple cards and everyone who comes on to talk about credit cards I always ask them how many credit cards they have in their wallet. So how many credit cards do you have, Drew? 

DREW TSITOS: I have quite a few being in the industry. But I use three to four is kind of where I think a lot of people will sit. I think a very common misconception is that opening a bunch of credit cards is bad for your credit. That's actually not necessarily true. 

I think also having multiple is helpful for segmenting your purchasing. So for example, my everyday spend might go on my credit card for groceries, but then if I have a big purchase coming up, I might put it on a low rate card. Right. That would help me separate the balance that I need to pay over time versus the one that is my everyday essentials. Right. 

EMILY BIGHAM: I wonder if that would be a little bit complicated for people who just are not in the, quote unquote, "industry," especially with a digital wallet. So let's say you're at the grocery store and you're using your phone, you're using your digital wallet, how can you make sure that you're choosing the right credit card? 

DREW TSITOS: Sure. I think digital wallets make it super helpful. Right? Now when you go to the terminal, most point of sales, which is the actual physical terminal in the store, will accept your phone as payment in your Apple Wallet, your Google Pay, Samsung Pay. That's why I think it's important to have a card similar to a flat cash back card. You don't have to think about it. 

To your point about simplicity, sometimes it can be challenging to know what card to use. And you don't necessarily need to always think about it. Having that one card as your top of wallet, the one you reach for, I think makes it much easier. You're making one payment, all of your balances in one place. It's easy to track from a budgeting perspective. And so I think that's the beauty of those flat cash back cards. And it's actually a personal story for me is that's where I started. 

My first credit card-- I didn't get one until after college-- was during the holiday season. And I went for that flat cash back because, again, I didn't want to have to think about it. I had the same kind of question that you just posed was, how do I know what to pull out? With one card, it becomes very simple. There's obviously strategies if you want to have multiple cards, like I mentioned previously, putting big purchases on one and every day on the other that you employ. But those certainly become more complicated. 

EMILY BIGHAM: Yeah, definitely. And some other things that I didn't know but I'm glad I know now is not to close those older cards. So even if you do a balance transfer and you consolidate your debt, don't close that other card. I got my first credit card when I was in college but I don't use it anymore. But I just keep it in a drawer. 

And some people will be like, oh, you should cut it up, this and that. I'm like, I don't know. Maybe I just will want it one day. And also, I want to keep the credit line open because, as you said, it's good for your credit score. So what other things are good for your credit score besides the utilization 

DREW TSITOS: So again, back to the payment aspect of it, I think that's the most important thing. A lot of times-- you asked me about how many cards I had. Having a lot of cards can add complexity to your payment schedule. And I think that's where you can get yourself into a little bit of hot water. If you have one or two cards, it can be easier to know when to make those payments. 

Make sure you're paying at least the minimum again. But again, always recommend that you pay over the minimum if you can. I know a lot of people might think that, oh, I'll just pay the minimum. That's what's required of me. That will actually then still accrue interest. So over time, you're still paying more. So if you can pay over the minimum at that time, that's your best bet. Again, to your point, also making sure you keep that oldest line of credit open is certainly a good idea. 

The other thing you consider too, with that old card is maybe it doesn't fit your needs anymore, but you can always call up that financial institution and have it changed into a different product. Maybe then it becomes something you leverage going forward. 

EMILY BIGHAM: Yeah. That's a really good point. So during the holiday season when people are swiping their cards or pulling out their phones and paying with their phones, I think we're definitely seeing fraud go up across the board. So do you have any concerns about credit card fraud or what are we doing at Navy Federal to help members? 

DREW TSITOS: Yeah. I mean, in an increasingly digital world, there's always going to be concerns about fraud. I think something I still see a lot of is people are dipping their cards, so inserting the chip into the reader or swiping the card. If a contactless terminal is available to you, a lot of the cards now are contactless where you simply pull it out of your wallet and tap it to the reader. 

Those transactions are typically done about 10 times faster. They are also more secure. It doesn't actually require the physical hardware, which can sometimes be tampered with, not generally a concern but can happen. With contactless, that's usually your best bet. It's faster for you. It's more secure. 

EMILY BIGHAM: What about freezing your card if you see something? If you're out shopping and you get an alert from your financial institution and it's saying, oh, you have fraud on your card, well, that's going to be a little bit annoying, right? Like you're out and you're getting the deals, but you're probably with your family, what are some easy ways to make sure that you can continue shopping but then also make sure your card doesn't get compromised? 

DREW TSITOS: Yeah. Again, back to the digital capabilities, I think a lot of issuers now have the ability to freeze and lock your card. And so if you suspect there's some activity on there that was not conducted by you, you can very quickly dispute it with Navy Federal and with others and then also lock the cards so additional purchases can't be made. 

The other thing I'd call out is a lot of issuers also offer in the mobile app to set up alerts for certain types of purchases. So I can go in there and say, for every purchase, over $100, I'd like to be notified that that transaction went through and was approved. So that way, one, it's a good reminder for you when you're maybe overextending on expensive purchases, oh hey, I just spent this much, it's also a good way for you to track that you are actually the one making those purchases. 

EMILY BIGHAM: That's a good point. So yeah, so overextending. I don't mean to keep bringing this up, but consumer credit is very, very high. What are we doing at Navy Federal? What are we considering when we see those kind of record-breaking numbers about consumer credit? 

DREW TSITOS: Yeah. I mean, in a lot of ways, it's tough with inflation. Right. I mean, you've heard it on the news. And we talk about it a lot. Inflation makes it very challenging for all of us at the grocery store, at the pump. A lot of the everyday spending that we need to conduct just to live our lives has become more expensive. And so I think that's really the product what's causing a lot of that record high credit card debt. 

And so that's back to my point originally, think very strongly about what type of product you're looking for. Is it a low rate product? Is it a rewards product? Is it maybe something that offers both because those do exist. Right. Again, we touched on the Cash Rewards Plus card, but there are introductory APR offers on the product so you start with a lower rate but you're also earning rewards at the same time. So that's kind of that middle ground product that you might want to consider. 

EMILY BIGHAM: So what if you don't have a credit card and you're concerned about applying because you're worried that you might get denied? What do you do there? I know that's pretty scary for people whenever they try to apply for credit, they're worried they're going to get denied. So any tips there? 

DREW TSITOS: Yeah. I mean, it's a very common fear. It was honestly my fear as well. That's why I didn't get a credit card until I think a little bit later on is I wasn't sure if I was going to get approved. You hear all these things about it kind of damaging your credit. 

So I think the first thing you can do is get prequalified. A lot of issuers offer a pre-qualify tool on their website. You put in some basic information about yourself, your income, those types of things, and then it will give you back an idea of what your chances for approval are. It's not guaranteed, but it's a good first step in thinking about cards. 

The other option is to go for a secured card, which does require a deposit. So, for example, if I put $100 down, then $100 would be my spending power. And then after you use that card for a few months over time responsibly, pay the full balance off, then there's an opportunity for you to be upgraded to an unsecured product that then returns you back your deposit and now you can spend freely on a normal credit line like you'd expect. 

EMILY BIGHAM: And can you do a pre-qualification for a secured card or is that not necessary? 

DREW TSITOS: You can. Yes, you can. I think, generally, secured cards are a little bit easier to be qualified for if you have that deposit available. So it's not a bad idea. It's not necessarily required, but it's something you could consider. Yes. 

EMILY BIGHAM: So at Navy Federal with our secure card, is there anything that makes it different than others? Why come to Navy Federal to try to rebuild your credit? 

DREW TSITOS: Yeah. It's another good question. I think secured cards, a lot of times the core intent is to build up your credit. So we're not as focused on maximizing rewards in that space. It's really let's establish credit. And then once we do that, then now let's think about earning all of those rewards. The great thing at Navy Federal is our nRewards card does also offer rewards on it. So you can earn rewards while you're building your credit up. 

You also started to touch on some additional things that we have where, if you qualify, we will pass you additional credit line and more spending power after you make on-time payments and use the card responsibly. And then, ultimately, the objective of the secured card is to get you into one of our unsecured rewards products. That's what most people are aspiring to. And there's a clear path there. So I think a secured card is a great way to start that credit journey, especially if you're unsure if you're going to be approved for an unsecured product. 

EMILY BIGHAM: So is there a possibility for a member to get a secured card and then end up in this new Cash Plus 2% card? 

DREW TSITOS: There is. So the beauty of that is actually when you start in secured, there's a very clear journey that we'll provide to you. Right. You earn your 1x today and then there's an upgrade where you could earn 1.5% cash back and then all the way up to the 2% cash back on the Cash Rewards Plus card. So that's a very realistic journey that I think a lot of people will be interested in and one that I would encourage. Again, working towards having the one flat cash back card in your wallet just makes things much simpler than having to fumble at the point of sale, trying to decide, OK, which card do I pull out now to make this purchase? 

EMILY BIGHAM: What about paths for our military members who need help? Maybe they're first time to credit. Maybe they just got deployed or they're at recruit training. Do you have any tips for them on how to get their credit journey started? 

DREW TSITOS: Sure. Obviously, our mission is to serve those in the military. And we have a lot of unique offers specifically for those members. A lot of them include introductory rates. We know that sometimes it can be hard just making those everyday purchases and staying in a place where you feel comfortable. We also have additional spending rewards on things like at the commissary. Right. You're on base. You need to buy those essentials. We'll give you an additional 3% cash back or something of that nature. So all of those are things that we're very focused on. That's our core segment. And we always are looking for ways to provide value back to our military members. 

EMILY BIGHAM: So do the members or their spouses, when they're at the commissary, do they have to do anything to get that discount because I know sometimes with military discounts, you have to show an ID or sometimes it can be a hassle for service members to have to get those benefits. Is there anything like that with our cards? 

DREW TSITOS: Sure. No. I mean, in general, if you're coming through one of those special offers, then all of it is automatically applied to your card. You don't have to do anything. There's nothing required of you, no opt-in. 

We do also, for existing members that might already have a credit card, there are offers that we'll send to members that you might need to opt into. So keep an eye out on your email. A lot of times there will be additional value to be had there. 

EMILY BIGHAM: Nice. What about spending overseas? Can we do that with our cards? 

DREW TSITOS: Of course. Yes. I mean, our members are stationed all over the world. And so having that payment or the purchasing flexibility is really important. We have no foreign transaction fees on all of our cards. So a lot of times you on other cards when you swipe overseas, you'll get hit with a 3%, 4% foreign exchange fee. Here we waive that fee entirely so it's just the full amount of your purchase. 

EMILY BIGHAM: Nice. So go back to the holiday debt a little bit. We talked about using a credit card as a way to budget and using rewards as a way to help fund your purchases, but what about when you're in that spot where you have just been spending too much on your credit cards and you're at that point where it's just getting to be too much? What are some resources that we have here at Navy Federal? 

DREW TSITOS: Yeah. It's a great question and a situation where I think a lot of people find themselves. You can always call us. We have counselors available to you. If you find yourself in a really tough spot, there are always options, too, on some of our new cards, again, some of those 0%'s are available. I'd also point to some of our services in MyMakingCents 

Again, there are ways that you can set a budget. There are ways to manage your cash flow to see when your paycheck's coming in, where that money is going. And so I think a lot of it, if you don't have a plan now, I think sitting down and talking with someone about establishing a plan is a really smart way at the beginning. But if you find yourself in a tough spot, you can always call us. 

EMILY BIGHAM: And when speaking to our collectors, they've mentioned before that, a lot of times, the member actually is in a better spot than they think they are, but they're just nervous to talk about it or to sit down. And so definitely I think that's a really important thing to do and probably a good thing, even if you're not necessarily worried about holiday spending or debt, maybe it's a good idea to do it now before so you're not overextending or just kind of always making sure that you're able to budget and using different budgeting tools that we have online. 

DREW TSITOS: Exactly. And so many of those budgeting tools are available on your phone now which I think is incredibly helpful when you're in the store and you're not sure if you can make that purchase that's maybe $20 more than you thought it was going to be when you walked in, going back and looking at your budget and figuring out where that's going to put you, I think, is really the most important piece. 

A lot of navigating the holidays is preparation. And a lot of times, it's work we don't really aren't really excited to do right. But I think it really is beneficial to do that. And then again, it doesn't hurt to use a rewards card. You'll get some of that spending-- you'll get some of that back as cash back and then you can actually take that cash back, apply it to your balance, and now your payment is lower. 

EMILY BIGHAM: That's great. So is there anything else that you want to talk about today that we haven't covered? 

DREW TSITOS: No. I think the one thing that really quickly I think is great is, again, I mentioned at the beginning, we're really always trying to find ways to provide more value to our members. You talked about different rewards products and what to look for. 

We're constantly reevaluating that, talking to our members, trying to figure out what are they interested in, what do members want from Navy Federal Credit cards. And so the 2% cash back card was just the start of that. I think we have a lot of other really exciting things planned as it relates to not only our rewards products but some of our other cards as well. And so I would just hint at keep your eyes open in the next couple of months. There's going to be some exciting things coming. 

EMILY BIGHAM: Great. Well, Thank you so much for coming on. Have a good one. 

DREW TSITOS: Thanks, Emily. 

SPEAKER 1: Navy Federal Credit Union is federally insured by the National Credit Union Administration. This podcast is intended to provide general information and shouldn't be considered legal, tax, or financial advice. It's always a good idea to consult a tax or financial professional for specific information on how certain laws may apply to your individual financial situation. 

References to and participation with the military community does not constitute organizational endorsement. Navy Federal is an equal housing lender. Navy Federal Credit Union. Our members are the mission.