The winter holidays are a fairly common time of year for consumers to tack on extra credit card debt—holiday shopping has added an average $1,000 to Americans’ debts annually over the past few years.
So what can you do to manage this inevitable debt come the season for shopping? Here are a few things to keep in mind.
It’s not that uncommon for consumers to have multiple credit cards. And come holiday shopping time, they may get used more often than they typically do. But when it comes to repaying multiple credit cards, shouldn’t you spread the wealth and pay them down simultaneously? A study from Georgetown University actually found that consumers who focus on one credit card repayment at a time are more successful in repaying debts than those who spread payback-ability across multiple cards.
So you’ve decided to focus on prioritizing one of your credit card debts first. But which one should you start with? Studies have shown that the satisfaction that comes with paying down a debt actually helps consumers to pay them off more quickly—so prioritize the debts with the smallest balances. (Plus, if you pay off one quickly, that’s one less monthly minimum that needs to be covered and more cash available for other bills.)
One great option for prioritizing your debt is simply to transfer your balances to a lower-rate card—SFFCU offers a Better Rate credit card that can give you a more manageable interest rate, with a competitive balance-transfer fee.
Just remember—while you can focus on paying down one of your debts, don’t forget to still pay the monthly minimums on your others.
January has sort of become the “debt repayment” month post-holidays. Since it’s the same every year, try to anticipate this. Plan on cutting back on “extras” in the month of January. Eat out less, temporarily turn off luxury entertainment services, staycation to save on gas and lodging—whatever you can do to set aside more cash for paying down holiday credit card debt.
Once you’ve made your minimum payment, credit cards can be a bit “out of sight, out of mind.” But most credit cards allow more than one payment during a billing period. If you come into some extra cash, consider paying ahead on your credit card and speeding up the repayment process. Say you pass on eating out one night—put that $50 you saved toward your debt right away.
Credit cards don’t have to scare you way come holiday shopping season. We offer options to fit your everyday spending habits—from awesome rates to amazing rewards. Talk to one of our lenders today, or click here to learn more about your options.