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.
Transfer Balances Whenever Possible:
Since the new year is a good time to evaluate all debt, it is a good time to reevaluate the credit cards that you have. In some cases, there may be cards which will allow for balance transfers with no interest payments for six to 12 months or more. Those who are eligible for these cards may want to consider doing this as this may allow them to pay off other credit cards before these balances begin accruing interest.
Make More Than the Minimum Payment:
Whenever possible, it is a good idea to make more than the minimum monthly payments. This can be done in a number of ways including turning unwanted household items into cash (selling them on eBay or Craigslist), returning unwanted holiday gifts or applying holiday bonuses received to outstanding balances. This will help you avoid paying for holiday gifts for the next 12 months and 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 and using the cash-back rewards to pay down balances.
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 cancelling.
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 credit card debt can mean paying a lot of extra interest making the cost of 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.
Article Courtesy of Credit Card Approval Center
