Time to Start Paying Off That Holiday Credit Card Debt:
Now that the rush of the Holidays is over it is time to get down to business and evaluate how much new credit card debt you incurred doing your holiday shopping.
For most of us, this turned out to be more than we originally intended. Each of us, therefore, must try to find the best ways to reduce our credit card debt and make sure we do not spend the entire year paying off our holiday purchases. Paying off holiday debt faster can mean saving hundreds of dollars in credit card interest. Here are some suggestions:
Determine Which Card is Costing the Most:
The first thing you should do is determine which of your credit cards is costing you the most. This is not necessarily the card with the highest outstanding balance. In many cases, a credit card with a lower balance which has a higher interest rate can be more damaging than a card with a lower rate and higher balance.
Pay Off Holiday Credit Card Debt by Transfering Balances:
Since the new year is a good time to evaluate all debt, it is a good time to re-evaluate the credit cards that you have. In some cases, there may be cards which will allow for balance transfers with no interest payments for 12 to 18 months or more. Those who are eligible for these cards may want to consider doing a balance transfer. This will allow them to pay off their debt without wasting a lot of money on interest.
Get Holiday Credit Card Debt Paid Off as Quickly as Possible:
Whenever possible, try to make more than the minimum monthly payments on your credit cards. This can be done in a number of ways including turning unwanted household items into cash.
There are a couple of apps for selling your items locally (LetGo and OfferUp). If you don’t mind packaging and shipping, there is always the option of selling things on the ever popular eBay.
You may want to consider applying any holiday bonuses received to your outstanding credit card balances. This will avoid the problem of still paying off your holiday credit card debt come next Christmas. It will also considerably reduce the amount of money wasted on interest.
If You Need to Use a Credit Card:
During the next several months, while you are in pay-off mode, if you should need to use a credit card think carefully before you decide which one to use. Those who have a cash-back credit card should consider using this card. Some cash back credit cards offer the option to obtain your cash rewards at any ATM. Other cards will credit the cash back rewards to your credit card balance.
Do Not Cancel Any Cards:
Many people think the best way to stop using a credit card is to cancel it. Be careful when doing this as it may wind up damaging your credit report. If necessary, put the cards in a file cabinet or in a desk or dresser drawer and simply do not use them.
It is never a good idea to cancel a credit card unless you have just received a new card with an equal amount of available credit to take the place of the one you are canceling. This is because your credit score is based on the amount of credit you are using in relation to the amount of credit you have available.
Paying off holiday debt is a challenge that nearly all of us face. Most consumers do not spend more than they can afford, but the amount of additional credit card debt can mean paying a lot of extra interest, making the cost of those gifts much higher.
Evaluate all of your outstanding debts, determine where you might have extra cash to pay them down, and create a short-term plan to get your credit cards paid off as quickly as possible.