Afraid to open the credit card bill after the holiday season? Experts say the average American carries $15,000 in debt spread over about eight credit cards and nearly a third of that debt is racked up in December alone. How can one make sure to pay off the debt and get on the right foot financially for the new year?The first step of tackling holiday debt is to calculate how much one owes. “It’s kind of a scary thought because lots of people spread out their debt over several credit cards so it doesn’t seem so overwhelming during the holidays. But the only way you’re going to get out of it is by writing down everything you owe and the corresponding interest rates so you know which ones to start tackling first,” said Patricia Hasson of the Consumer Credit Counseling Service.
Another step to help with debt is to make sure not to fall deeper into it. Put credit cards on hiatus experts suggest hiding cards or putting them away in a safe place so one isn’t able to keep spending and get further into debt. Also make sure to only buy what is necessary after the holiday season. One should ask his or herself, “Do I really need this?” With all of the shopping bargains after the holiday, it is often tempting to spend more money on items that are not necessary.
Jean Chatzky, editor of Money Magazine, says transferring balances to a card with a lower interest rate can give one the opportunity to catch up on payments. The average cardholder receives no fewer than five new credit card offers a month, so review the terms carefully before signing up.
“Credit Card Company’s idea of a good customer used to be someone who could pay a decent chunk of their bill each month,” Chatzky said. She reports that now minimum payments on credit cards have decreased to as low as two percent for many.
Many people with significant debt can be charged interest rates in the 25 to 30 percent range, and will end up paying nearly double the original amount by the time it is paid off. It is key to pay as much as possible for each monthly payment to avoid paying more interest in the end.
Finding some quick cash when you are in credit card debt is easier than one might think. If the credit card debt keeps piling up, one might consider getting a second job. Chatzky suggests that temporary employment and seasonal work is easy to come by. Working at a restaurant is a quick way to earn cash and have it in your hands at the end of the night. One can also consider trying to unload any unneeded items – such as clothing, books, etc. – selling them on eBay or holding a “flea market” among friends.