You Put Christmas on Credit – Now What?

By December 24, 2012Revolving Debt, Your Credit

The holidays are here! ‘Tis the season to gather in joyous celebration and give to all those you love. Most people will use their credit card to make their holiday purchases this year. Credit cards can offer many benefits during the holiday season, such as secure online shopping. You can even earn point or cash back benefits from your credit card. Come New Year’s day, however, you’ll have more than just a hangover from the champagne; you’ll be left with the holiday hangover – your credit card bill.

You won’t be alone. More than half of the population in the U.S. relies on credit cards for Christmas shopping. Rather than worry about what you’ve already spent, take the time now to plan your recovery. You can put get rid of the debt quickly and prepare better for next year’s holiday fun.

Pay off the debt as soon as possible. If you can pay it off before the next statement, you can avoid much of the interest; if you need longer, try splitting payments to pay off the debt over the next two billing cycles. Those great Black Friday deals are not so great when you are paying interest on them month after month. Earmark any holiday money, tax refund, or post-holiday bonus you might receive toward paying off debt. It might be more fun to have another shopping spree, but you’ll be rewarding yourself in the long run by reducing your credit debt.

Stop using your credit card now. Continuing to add to your credit card balance will put you in a never-ending cycle of barely affording minimum payments and increasing your debt. If you can’t afford your purchase with the money you have right now, you can’t afford it at all.

Talk to your creditors. If you’re worried you might not be able to make payments, or if something happens to your job or your health that impacts your ability to repay, don’t wait. Try to negotiate a lower interest rate or transfer balances to other cards to lower the interest rate.

Set up automatic payments. To help reduce your balance quickly and avoid late fees, set up automatic payments with your credit card companies. You can use Ovation tools to create a plan to have your credit cards paid off sooner.

Once you have your holiday debt paid off, start saving for next year. Make and stick to a budget to avoid the strain of mounting debt. A Christmas savings account can get you through the next holiday season with ease. The holidays should be a time of laughter and celebration, not stress and mounting debt. No gift is worth the anxiety you feel when you see your next credit card bill.

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