Got debt? The holidays may be prime time for accumulating extra credit card debt, but here are ways to eliminate it quickly.
Uh oh! You did it, didn’t you? You used your credit cards to finance your holiday shopping! I’ll save the scolding, and instead advise you to bite the bullet and get rid of that unneeded debt NOW. Average holiday spending this year was anticipated to be around $1,154 per household. At 12% interest (the current average for credit card interest according to Bankrate), paying $100 per month toward your holiday debt would mean you’d be paying for that debt for 13 months! At $250 per month, it would still take you 5 months. Do you really want to pay for the joy of the winter holidays until Memorial Day?
Got Holiday Debt? How To Eliminate Debt Quickly
If you’re in a position to be able to just write a check to pay off the bill, then don’t hesitate — just do it. You’ll pay more in interest on the credit card than you will earn if your money is sitting in a bank. If you’re not in a position to write the check, here are a couple of debt reduction strategies to implement:
- Try to find a new credit card that will give you 0% APR on balance transfers. Even if you intend to pay the debt off quickly, it’ll be a little less painful if interest isn’t accruing while you make payments. Once you’ve got the new card on hand, get rid of the old one.
- Cut back. Cut way back. There shouldn’t be any unnecessary spending. Nix the dining out, trips to the movies and mall, manicures, etc., until the holiday debt has been paid. Also, make the payment to the credit card immediately upon saving the money.
What I mean is this: if a friend calls and asks you to go to dinner but you turn them down, immediately go online and pay the amount you think you would’ve spent on that dinner, to the credit card company. It may sound silly, but knocking off the amount of a dinner plate — say a mere $30 each week in unnecessary expenditures — could save you over $1,500 extra each year. Bottom line: this habit alone will pay off that average holiday credit card debt of $1,154 (assuming that spending is placed on credit, that you don’t mind taking 10 months to pay things off, and that you’re using a 0% interest card), and also give you $300 towards next year’s holiday spending! - Funnel “extra” money toward the debt. Expecting a rebate check for any of your holiday purchases? How about that last reimbursement check from last year’s Flexible Spending Account? Did you collect $10 for winning second place in a beauty contest 😉 ? Put any of these little bits of “extra” money toward that credit card bill. Again, as soon as the money is on hand, go online and make a mini-payment toward the credit card.
- Maybe you’re expecting a tax refund this year… As those tax documents start trickling in, start a file. As soon as you’ve got everything you need, get thyself to an accountant. Choose the direct deposit option for your refund and you’ll get your money weeks sooner. Once you receive your refund, apply it directly to credit card debt. You can now sigh in relief.
If you’re anticipating refunds on a regular basis, consider stopping by your company’s HR office and adjusting your tax withholdings so that your monthly paycheck is larger, and the government isn’t simply holding on to your money, collecting interest on it. Put each payday increase into one of those high-interest bearing online bank accounts and earmark your savings for next year’s holiday spending.
By implementing these tactics, you’ll be amazed at how quickly you can eliminate your holiday debt and move on with your life. Just remember to plan ahead now for next holiday season, so that the debt monster in the Santa hat doesn’t come back to bite you in the rear.
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great advice for tackling that nasty credit card debt as quickly as possible. Also, don’t forget to make it a regular practice to call your credit cards to ask for a lower rate. I have one client who owes over $20,000 on a Visa that was at 18%. He spoke with a ‘rate specialist’, touting his rising credit score and declining balance and got his rate cut in half, from 18% to 9%! His monthly interest charge was instantly reduced by $150, which will help him pay off his debt even sooner.
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