How To Dig Out Of Holiday Debt Before Summer
Buying all those gifts, traveling to spend time with loved ones, making things merry & bright and everything else that goes into creating happy holidays doesn’t come cheap. As a result of all that festive spending, a lot of people end up in debt.
According to Today, a new LendingTree study finds that 35% of Americans racked up holiday debt in 2022, with the average amount of $1,549. More than a third of them (37%) expect it will take them at least five months to pay it off. If you’re one of them, taking these steps now will help you pay your holiday debt off before summer.
Pay off a set amount of debt in three to five months – The average household’s credit card balance is more than $9-thousand and overall, credit card balances hit their highest level in 20 years last November, according to the Federal Reserve Bank of New York. Experts including Nicole Cope, director of wealth strategies at Ally, recommend starting 2023 with a resolution to pay off high-interest credit card debt first, then set a budgeting goal to pay it off in three to five months.
Work on boosting your credit score – Better credit scores help you qualify for lower interest rates on credit cards, loans and mortgages. Using less than 30% of your available credit can help you maintain your score, while using less than 10% can help raise it.
Apply for a 0% interest balance transfer credit card – If your credit is good enough to get one, this is one of the best ways to get out of credit card debt. Matt Schultz, chief credit analyst at Lending Tree, explains, “You can get almost two years without gaining interest.”
Ask your credit card company for a lower rate – If you don’t ask for one, you’ll never get it, but a Lending Tree survey finds that 70% of those who ask for a lower interest rate on a credit card got one and the average reduction was seven percentage points.
Consolidate debt with a personal loan – If you can’t get a 0% card or a lower rate on a credit card, try getting a personal loan. That way, you can consolidate all your credit card debt with that loan. According to Bankrate.com, the average rate on a personal loan in early December was 10.64%, less than half as much as the average credit card rate. Just make sure you use it to pay off your credit cards and don’t spend the money.
Source: Today
