Credit Card Debt After the Holidays: What Can I Do?

According to Magnify Money, Americans tend to rack up about $1,054 in debt during the holiday season, but many people aren’t able to pay more than the minimum. With a 15% interest rate and a minimum payment of $25 a month, it can take more than a decade to pay off the debt of a single holiday season. While this is a bleak picture, there are ways you can help alleviate your credit card debt before you find yourself facing significant financial issues.

Focus on the Highest Interest Debt First

To avoid delinquency, it’s necessary to make the minimum payments on all your debt, but if your debt is spread across multiple credit cards and loans, you should focus on paying off the highest interest debt. Take a few minutes to organize your debts in order, based on the interest rate. Tackle the one with the highest interest rate first, even if it doesn’t have the highest debt amount.

It can be easy to look at your overall debt and try to pay off the biggest debt first. While this is satisfying to accomplish, interest can easily sneak up. You may end up paying far more due to high interest than you would have otherwise.

Always Pay More Than the Minimum On Your Focus Debt

Now that you’ve determined which debt to focus on, it’s time to pay it off. Paying the minimum amount will help you keep the credit card company off your back, but it won’t help you may any substantial progress in paying off the debt. Keep paying the minimum on the rest, but find ways to pay anything extra on the bill. Adding even a little bit to your monthly payment will reduce the total amount you pay, since you will be paying back your debt faster than the interest can build.

Clean Out Your Closets

While this may not be the easiest way to make money, it’s a good start. Go through your closets, cupboards, garage, and attic, looking for things you don’t use. Whether it’s that blouse that just isn’t your color or the kayak you never are going to use again after that one trip to the lake, it can help you repay your credit card debt. DePop and other mobile fashion apps can be great for getting rid of clothing. Check out Craigslist and LetGo for nearly anything, from winter coats to hobby supplies and sports equipment to collectibles. Ebay is also a favorite site for selling nearly anything. Choose your method based on your schedule and needs. If you don’t want to deal with the hassle of shipping, use a pick-up method of selling, such as Craigslist. You may even choose to have a good old-fashioned yard sale.

Remember, this isn’t about getting the highest value out of your old stuff, this is about getting the best value. Price your things to sell. It’s better to get rid of them for less money than to never sell it because you’re seeking too high a price. This can also save you from the trouble of relisting an item because it didn’t sell.

Transfer Balances and Consolidate Your Debt

It can be overwhelming to consolidate your debt into one big lump sum, but there are many benefits to doing so. Consolidating debt may lower the interest on your higher interest debt. Transferring your balance to one card is one way to help consolidate your debt. Many credit card companies offer balance transfer deals for new cardholders.

Often, these deals allow you to transfer the balance of one or more cards to the new card with a low, or even no interest rate for a set period of time. Because you aren’t paying interest for that period, you can focus on paying of the debt amount without the interest piling up. Alternatively, you can transfer your highest interest balances and pay the minimum while you have low or no interest, and focus on paying off other debts that still have interest.

Make Smart Cut Backs

Often, the term “cutting back” makes people think of losing their little pleasures, but it doesn’t have to. Instead, look on other ways you can save money, so you can still enjoy your life while freeing up some additional cash to pay off your bills. Look for ways you can save on energy bills, such as turning off your lights when you’re not in the room, adjusting your thermostat by a few degrees to lower your energy costs, and insulating and sealing your home. Buy the generic version of products you normally, use, since many generics are just as good as the name brand.

It can be easy to find yourself struggling to repay your debt, but you don’t need to face your debt issues alone. If you are being confronted by creditors, foreclosure, wage garnishment, tax liens, or other debt problems, don’t hesitate to get in touch with our Worcester bankruptcy attorney. At the Law Office of Robert W. Kovacs, Jr., we are ready with our caring, client-centered approach to help you find relief from your debt issues.

Learn more about the ways we can help by scheduling a free case evaluation with our legal team. Contact our firm by calling (508) 645-4073.