Post Holiday Belt Tightening

by Susanna Hamilton, Contributing Editor on January 18, 2013

Paying Off Holiday Debt
More than six percent of consumers are still paying off debt they incurred during the 2010 Holiday season according to Consumer Reports. In spite of this, the 2011 Holiday season saw consumers once again reaching for their credit cards and piling on mountains of new credit card debt.

Now that the Holiday season has passed, many will consider shopping at inventory clearance sales, close-out sales and more. However, instead of spending even more money that will have to be paid back over time, it’s time to get serious about post-holiday belt tightening and begin paying off those Holiday debts.

Gather All of Your Credit Card Bills:

One way to drive home just how much Holiday debt you’ve accumulated is to dig out all of your bills. There are few things that will make you more aware of how far in debt you are than having all of these bills in one spot and getting a birds-eye view of just how bad the situation really is.

Once you have done this then it is time to create a chart of accounts. List the card name, interest rate, minimum monthly payment and balance. You should also note the credit limits on the card as well as note whether the card offers cash-back or other reward features.

Developing Your Plan:

When you have completed your chart, it’s time to create a plan for post-holiday belt tightening. The very first step to this is to put away all of the credit cards except for one that may be used for emergencies. Determine which card is the most beneficial in terms of interest rate and features like cash-back. The remaining cards should be put away until the balances have been paid in full.

There are several tricks you can use to help you reduce your credit card debt, and this is the best time of year to take a look at all the possible options that are available.

  • Tax Reductions – Many of us have forgotten that we’ve been given a break on our payroll taxes. Grab one of last year’s pay stubs and see how much you are bringing home “extra” and put that amount towards your credit card bills.
  • Year-end Bonuses – Many people may see a year end bonus coming in the next few weeks. Unless this bonus has been earmarked for another necessary (yes, necessary!) purpose, consider using a significant portion of that bonus to help pay down your credit card debt.
  • Gift Cards and Bonus Cash – Gift cards that were received during the holidays can be sold and gifts that were unneeded or unwanted can be returned to the original store, many times for cash refunds. This can help put a real dent in credit card bills. If you do not have gift receipts, contact the giver if possible and see if they have one. Check store policies on returns so you do not miss important dates. Bonus cash from credit cards that offer cash back, rebate checks from gifts you purchased and other “surprise” cash can also help reduce credit card indebtedness.

Every person will have to determine what their options are when it comes to paying down credit card bills. In some cases, additional payments may be made by transferring card balances to lower interest rate cards (saving money every month) or by taking advantage of small amounts of unexpected cash from coupon savings, rebate checks or cash-back checks from other credit cards.

Keep in mind that the faster you pay off your credit cards, the less interest you will be paying on the cards. This can mean a savings of hundreds or even thousands of dollars in your total outstanding debt.


Article Courtesy of Credit Card Approval Center

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