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How You Can Manage Holiday Personal Credit Card Debt
The best way to avoid bad debt is to plan your expenses, set a definite budget, and stick in your limit. But imagine if you find yourself stuck in credit card debt right after the holidays? What would you do in order to get yourself out from the situation? On this post, we present strategies for cardholders regarding how to manage debt:
1. Check your accounts. Make sure that there arent any incorrect charges in almost any of your accounts, especially if you have balances on multiple credit cards. In case you notice errors, call up your credit card issuer immediately to dispute the costs. This way, you can be certain that you are not paying off debts you didn’t owe.
2. Prioritize your financial situation. If you will be working with multiple personal debts, see which of your respective accounts have the highest rate. When possible, pay off your full balance from this account to stop debt from further accumulating. Be sure to submit the minimum due payment within the credit cards that you cant pay entirely to avoid extra fees. Afterwards, you are able to work with paying off the money you owe from one card to the next.
3. Consolidate personal credit card debt. Another approach is to transfer balances through your high rate credit cards to some card which has a low rate. Using this method, you may avoid expensive APR charges when you work with debt repayment. You may also have a credit card with zero balance transfer rate. However, just before you do, there are certain things you should think about.
Ensure that you will have sufficient time to totally pay down each of the balances you transferred. How long with zero rate of interest last? How much will the standard rate be once the promotion offer ends? How much is the account balance transfer fee? Furthermore, be careful that you do not max out or exceed your limit simply because this can badly pull down your credit score.
4. Minimize your spending. You are able to pay the balance of your credit card debt faster if you possibly could cut back on your monthly expenses. Find ways to minimize your costs so you’re able to prioritize on debt repayment.
5. Stop incurring new debts. Dont use one of your credit cards for brand new purchases. If youre done paying a balance in one card, be sure that you do not incur new charges for this account. Some people even place their credit cards within the freezer to literally freeze them and discourage them from spending.
6. Dont cancel old cards. Some people might think that the solution may be to cancel a credit card that has a high APR. However, before you decide to get in touch with your issuer and request to cancel, weigh the pros and cons first. If youve had that credit card for a long time, closing the account now will mean erasing the oldest portions of your credit report. Hence, this kind of move can negatively damage your credit score. Instead of cancelling a credit card, use it occasionally for small purchases and pay the balance of your full balance in a timely manner.
Consolidate Maxed Out Credit Cards Using Your Home – Post-Holiday Spending Tips
During the holiday season many families will turn to credit cards to finance Christmas expenses. This makes it less stressful to make ends meet, especially during the holidays. Sometimes we don’t even realize how much damage is done until the credit card bills start to arrive in January.
Credit cards are very convenient but have their pitfalls. Credit cards bear very high interest rates, often more than 20% interest and in the case of department store cards up to 30%. Interest is calculated monthly so if you get caught up in a pattern of only making minimum monthly payments, they can take years to pay off. Credit cards that have balances more than 75% of their limits will damage your credit rating/credit score.
The last thing you want to do is go into the next holiday season with credit cards that have balances from the spending you did the past holiday season. The best thing to do if you have accumulated balances on credit cards from holiday spending is to consolidate maxed out credit cards using your home.
There are many reasons why it is a great idea to consolidate maxed out credit cards using your home. Here are just a few:
1. Using your home to consolidate maxed out credit cards will enable you to start the New Year on a fresh foot and with a single monthly payment.
2. Using your home to consolidate maxed out credit cards will increase cash flow because a home equity loan or line of credit will bear a much lesser payment than what you are paying to your credit cards on a monthly basis.
3. Using your home to consolidate maxed out credit cards will reduce the overall interest that you are paying to loans and credit cards. Home equity loan and home equity line of credit interest rates are much less than what you are paying to your individual credit cards.
4. Using your home to consolidate debt will improve your credit because all of your credit card balances will be reduced to zero and the less debt reporting to your credit report, the higher your credit score will be. Also, as we mentioned when credit card balances exceed 75% of your limits, it reduces your credit score and will trigger a message to appear on your credit report that indicates that your credit card balances are too high in proportion to your credit limits.
It is important that if you consolidate your maxed out credit cards using your home equity that you don’t continue to use your credit cards. Put them away and only use a single card and make sure to use the card in denominations that you can afford to pay off in full each month. This will ensure that you don’t find yourself in the future with a new payment on a consolidation loan and paying credit card balances.
Start your New Year off with your finances in order and without the stress of having to pay a windfall of credit bills.