By: Creditcards.org Team
• Updated: December 19, 2016
Giving and sharing is what the holiday season is all about. It feels good when you share a gift with loved ones and friends that bring joy, tears and happiness. Many folks don’t like to think about the price of these wonderful emotions because you really can’t put a price tag on kindness. You can however put a price tag on everything you buy, and many folks will be using their credit cards to purchase gifts this holiday season. Fortunately, we’re not here to sell you something – we’re here to make sure you stay within your means. Whether you’re flush or bust going into the holiday shopping season consider these 8 methods to combat credit card debt. Related: Holiday Travel Made Easier
1). Don’t go into debt. If you are able to accomplish this feat then the next 7 steps are irrelevant. In the first two months of the year, or the first two months after the holidays, people seeking guidance by debt counseling agencies go up by 25%. This is no accident, because you guessed it, many folks take on more debt than they can carry while shopping for the holidays.
Quote – “The ideal Christmas gift is money, but the trouble is you can’t charge it.” – Bill Vaughan
2). Limit your debt. If you do take on debt experts recommend paying off your credit card within 90 days at the maximum. Paying a little interest every now and again isn’t a terrible thing. In fact, it helps build your credit. But have a plan going into your spending (like setting a budget) that takes into account how high above your means you intend to go. If you carry a balance through more than 3 monthly payments (maximum!) then reconsider your purchases, or consider other options.
3).Apply for a new credit card. If used responsibly, credit cards are meant to bring rewards to your spending and not cause you grief. But since we’re also Realists, and understand that a lot of people take on more debt from holiday spending consider opening a new credit card with a 0% APR on purchases. We recommend this cardthis card, which offers 0% on purchases for 21 months.
4). Consider a Balance Transfer. We can think of a few reasons why you would choose to utilize a balance transfer over applying for a new card: your rewards are worth more than the balance transfer fee or maybe you even have a card open that has a great balance transfer offer. But if you don’t, consider this cardthis card and this cardthis card that each have introductory offers of 18 months of payments at 0% APR on balance transfers. Related: Pros and Cons of Balance Transfers
5). Don’t be a multiple offender. Two out of 5 of you will make the best decision and payoff your credit card balance every month. Bravo! But if you’re the other 60% of folks who don’t, for whatever reason, experts predict rather easily that you’ll increase your credit card debt during the holiday season. “Revolvers” is a term used for those who stick to the minimum payment every month. Just remember that after taking on these extra hundreds, or
thousands of dollars your minimum could end up being more than you can handle.
Quote – “I wear the chain I forged in life,” – Marley says to Scrooge in A Christmas Carol
6).Attack lingering debt. Debt that sticks around should be attacked, and a good plan is the best way to go about it. We recommend this tool for any discussion about credit card debt to calculate credit card interest rates. If you have multiple cards that have balances use this tool to understand which chunk of debt is taking the most cash out of your wallet.
7). Pay Off Debt. When it comes to paying off debt, whether it’s the holiday season or otherwise, we have some sage advice: use the credit card interest rate calculator to find the highest interest rate, and then attack it in chunks. We know that some folks are struggling just to keep up with their minimum monthly payments. If this is you, then consider that when you get a little extra cash to put toward debt take aim at the balances with the highest interest rate. You’ll notice that your minimum monthly payments overall, will go down.
8). Keep Your Credit Score Up. Okay, so here’s the bottom line: if your credit score is poor or bad (649 and below), methods 1-4 are erroneous. You won’t be able to get approved for a new card and the balance transfer offers have probably stopped coming. If you’re carrying balances on multiple cards and only paying the minimum every month, then your credit score is falling as fast as your debt is rising. Related: 4 Credit Mistakes To Avoid
Quote – “The way you spend Christmas is far more important than how much.” – Henry David Thoreau
Every year we see articles come out around February and March that report on the surge in the amount of people whose debt has reached crisis levels. We’d very much like you to not be one of them. We prefer the feeling of happiness and kindness to last beyond the holidays and accompany you all year long. Consider that your cherished ones would never want to saddle you with a debt you can’t repay. Give them the gift of your own financial stability, and maybe a little something else too.
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