Using credit cards to make your holiday purchases may not be the wisest thing to do, yet on average, it adds nearly $1000 to the balance of many credit card holders. At an average interest rate of about 13.93%, that means you will pay an extra $350 for those purchases. Higher interest rates, of course, mean higher extra amounts, especially if you used a store card for the purchases.
Regret for those purchases usually sets in quickly after the holidays are over, often prompting some credit-associated New Year’s resolutions. If one of those should happen to be “paying off holiday credit card debt”, then we have some tips that can help with that.
Calculate Your Credit Card Debt Amount
It’s tempting to disregard the statement you receive after the holiday season and go on making the minimum required payment, but that is no way to get ahead. To take a serious assessment, calculate how much you owe exactly. Keeping receipts for purchases made is also a good way to know exactly what you have spent and how much has been added to the amount you owed prior to holiday shopping.
Create a Budget
Once you have calculated how much you actually spent for holiday shopping, you can create a budget to start paying off that amount. This depends on how quickly you want to pay it off. If you only wish to have it paid off before the next holiday season rolls around, you can divide that number by 12 and add that amount to the payment you are currently making. These figures can be adjusted depending on whether you want to pay them off in nine, six, or even three month’s time. Keep in mind that the sooner you pay them off, the less you will have paid in interest at the end.
Make an Extra Payment
This step can be much easier said than done. However, if you are adhering to a budget and find that you have some extra cash at the end of the month, send that in to your creditor. They will certainly be willing to accept more than one payment per month. Just like paying more than the minimum required payment, this will ultimately save you a lot of money on finance charges and get your balance paid off in a more timely fashion.
Get a New Card and Transfer Your Balance
This is a particularly wise move for people who do not have a great deal of credit card debt or who only have one credit card. Many times, new cards will offer no interest or very little interest on transferred balances. If you choose this option, it is best to advance with a plan for paying off at least the amount of your holiday debt within the terms of the low interest. Not only will this save hundreds of dollars in finance charges, it will help you to get the overall amount to a manageable level, so you are paying even less towards interest.
Plan for the Upcoming Holiday Season
It can be just as easy to put some money into a savings account for holiday spending, as it is to pay that credit card payment each year. While this does take some budgeting and foresight, it can save you hundreds of dollars in finance charges for credit card debt as well as make you more aware of the exact dollar amount you have to spend. While this is not the option for everyone, it does work and is one of the best ways to avoid holiday debt all together.
Chapter 7 Bankruptcy for Credit Card Debt
When credit card debt becomes detrimental to your finances due to an unmanageable size of debt or payment, Chapter 7 can be an option to discharge all of the credit card debt. Credit card debt is considered to be unsecured debt because it is not secured towards any asset. Learn more about Chapter 7 bankruptcy to see if it will work for you here: Chapter 7
