Christmas spending means managing New Years credit card debt: Five tips
Christmas is synonymous with presents, but all too many families max out their credit cards to make sure there are plenty of gifts under the tree. It's all too easy to rack up a huge debt load, as the couple did a few years ago in the video accompanying this article. Once you owe, there's always the risk of falling behind in your credit card payments, bringing a flurry of collection agency calls and black marks on your credit reports.
If you spent too much at Christmas, here are a few tips to get that debt down in the new year:
1) Slash your other expenses as much as possible. The time right after Christmas is a prime time to make New Years resolutions. Resolve to cut down on optional expenses like eating out, buying fancy coffee drinks, insisting on name brands, and impulse purchases for non-essential items. Committing to cutbacks means more money to put toward that Christmas credit card debt.
2) Pay the most toward your highest-interest credit card. Making only minimum payments on any credit card is bad, but it hurts you the most financially on high interest cards if you let the interest charges accrue. Pay off high interest credit cards first. The more you pay, the more money goes toward the actual balance rather than just the interest.
3) Ask for lower interest rates. If you're a good customer who always pays on time, your banks might lower your interest rate on request. It was hard to get a rate reduction during the credit crunch of the past few years, but things are loosening up now and lenders are getting more competitive. If you get good offers in the mail, call your current credit card companies and ask them to match those offers. Move as much of your balance as possible to the lower interest cards.
4) Never skip a payment. Besides hurting your credit rating for up to seven years, skipped payments rack up late fees and give your credit card company the right to raise your interest rate.
5) Talk to a credit counselor if you're getting in over your head. Even your best efforts might be enough if you really went overboard with Christmas spending. If you're starting to sink, contact a non-profit credit counselor before you go down too far. Check the credit counseling agency with the Better Business Bureau first to make sure it's reputable.
1) Slash your other expenses as much as possible. The time right after Christmas is a prime time to make New Years resolutions. Resolve to cut down on optional expenses like eating out, buying fancy coffee drinks, insisting on name brands, and impulse purchases for non-essential items. Committing to cutbacks means more money to put toward that Christmas credit card debt.
Buying gifts can rack up your debt.
3) Ask for lower interest rates. If you're a good customer who always pays on time, your banks might lower your interest rate on request. It was hard to get a rate reduction during the credit crunch of the past few years, but things are loosening up now and lenders are getting more competitive. If you get good offers in the mail, call your current credit card companies and ask them to match those offers. Move as much of your balance as possible to the lower interest cards.
4) Never skip a payment. Besides hurting your credit rating for up to seven years, skipped payments rack up late fees and give your credit card company the right to raise your interest rate.
5) Talk to a credit counselor if you're getting in over your head. Even your best efforts might be enough if you really went overboard with Christmas spending. If you're starting to sink, contact a non-profit credit counselor before you go down too far. Check the credit counseling agency with the Better Business Bureau first to make sure it's reputable.
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