Tips for Paying Off Holiday Credit Card Debt

credit card debt

The holidays are over. Now you are receiving your credit card bills from the previous months’ overspending.

In 2014, Coinstar placed an ad that stated 66% of Americans go over budget during the holidays, by an average of $116. A survey by Rubicon Project showed 78% of those surveyed planned to spend the same or more this year than they did last year and nearly one-third of US shoppers (31%) planned to spend more on holiday shopping this year versus last.

If you are one of those people, that finds you can’t pay your holiday shopping debt off in full, set a concrete goal for paying off your debt. The interest rates credit card companies charge are often astronomical. You can end up paying more in interest than you spent on gifts. If you are lucky enough to have a promotional rate on a credit card, monitor it carefully. You do not want the promotional rate to end having a balance on the account. It will be as if you never had the promotional rate in the first place.

If you have “old” credit card debt, at least make a goal to pay off your holiday spending charges by the end of March or April.

Instead of using your credit cards for spending after the holidays, consider using only cash or a debit card in order to stop accumulating additional debt.

For next year, plan ahead. Set aside money throughout the year that can be used for holiday gifts and don’t go over that amount. You can set up a bank account and have $60 dollars a week (or some other amount) automatically be deposited into that account and you will have $3000 available for holiday spending. By putting money aside as you go, you will (should) change your lifestyle to account for the decreased money available. When the holidays come around next year, you won’t have to worry about where the money will come from to pay for your purchases.

For the first year, if you are going to use January to March to pay off 2015 spending, start putting the money away in April. You don’t necessarily want to strain yourself. You may have a little less to spend on your 2016 gifts, but you can find a way to do it. Make a budget and stick to it.

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About Stacey Udell

Stacey Udell, CPA/ABV/CFF, CVA is a partner in the public accounting firm of Gold Gerstein Group LLC. Ms. Udell specializes in business valuation, forensic accounting, economic damages, and litigation support for a wide range of businesses and professional practices for purposes such as estate and gift tax planning and compliance, divorce, business succession planning, mergers and acquisitions, shareholder litigation, and bankruptcy proceedings.

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