How to Recover from Holiday Credit Card Debt

Closeup portrait of annoyed woman in Santa Claus hat hand on forehead playing tragedy expressing holiday stress isolated on grey background. Negative human emotions facial expressions attitude

People love holiday shopping, but they do not care much for the credit card bills that start coming in January. Once the warmth of the holidays has passed, many are left with the cold hard task of paying credit card bills. However, there are several steps you can take to pay back your holiday credit card debt and right your financial situation.

Create a Payback Plan

You will want to figure out which credit cards should receive your attention first. Some credit cards allow you to skip payments in January or February. If one of your card issuers offers this, focus your energies on the balances of your other credit cards.

Another way to prioritize payments is to check out your interest rates. If you have one card with a higher interest rate than the others, make the minimum payment on all of your other cards and pay as much as possible on the higher interest credit card.

Pay More Than the Minimum

If you only pay the minimum due on your credit card each month, you will carry debt for many years. Instead, pay as much as you can every month–even if it is just an extra $10 every paycheck. Any additional payments will help you reach that zero balance faster.

You may also want to make micropayments. Whenever you have some extra money, apply it toward your credit cards. Again, even if it is a small amount, these additional payments will benefit you over time.

Make Biweekly Payments

If you devote a certain amount of money to your credit cards every month, start making half a payment every two weeks. If you do this, you will make an extra payment by the end of the year. When you pay only once a month, you make 12 payments a year, but if you pay every two weeks, you will be making 26 half payments, which adds up to 13 full payments.

Consider Debt Consolidation

If you have debt spread across many different credit cards, you may want to consider consolidating your cards with a balance transfer. Before you do this, though, compare the transfer fees to your current interest payments. If all of your cards have a low interest rate, it may not be wise to consolidate. In that case, focus on making your payments on time.

When you consolidate debt, the card that receives the balances will likely charge you a fee. There are a few cards that have no balance transfer fee, which means you can transfer your balances without accruing additional debt.

Cut Spending

You may have splurged during December, but now is the time to cut back on your spending and re-examine your financial situation. It may be tempting to take advantage of New Year’s sales, but you need to keep your long-term financial goals in mind. Instead of buying the sweater that is on sale at your favorite department store, put that money toward your credit card debt.

If you really cannot control your spending, avoid temptation completely, and do not go shopping. That way, you will not be tempted by those “have to have” sales. Let’s be honest. Other than shelter and food, you do not “have to have” anything. You need to remain cognizant of that when your wants are taking over your brain.

Think of these small sacrifices as steps toward a better future. You will feel a weight lifted once you have paid off this credit card debt. Follow this guide, and you will be debt-free soon.

About Bill Hardekopf

Bill Hardekopf is the CEO of BillSaver.com and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
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