The holiday season is a wrap, but your credit card bills may still be lingering. If you’re still feeling the pinch from last year’s holiday spending, you’re not alone. Acting sooner rather than later can make a big difference. Our National Consumer Unit breaks down simple strategies to help you tackle holiday debt before it spirals out of control. Holiday spending adds up quicklyOn average, Americans charged more than $1,200 over the holidays, according to a LendingTree survey.At the same time, the latest Federal Reserve data shows interest rates are now above 20%. That combination can make paying off a balance more difficult than expected. If you’re only paying the minimum balance each month, it could take you years to pay it off and cost you hundreds of dollars extra in interest along the way. So here’s what you do. Step 1: Avoid adding new charges One way to stop the balance from growing is by not using the card while you’re paying it down. Consider removing the cards from your apps and physical and digital wallets to reduce the convenience of using them.Step 2: Choose a pay-off strategyIf your charges are on multiple cards, decide how to prioritize. The avalanche method targets the highest interest rate card first, saving you the most money in the long run. You can also try the snowball method, which tackles the smallest balance first for a quick win. Step 3: Try to lower your interest rateNow that you have a plan, see if you can boost your strategy by lowering the interest rate.You can do that by transferring the balance to a new card with a 0% introductory rate. Most balance transfer cards charge a one-time fee, usually between 3% and 5%, but that can still cost less than paying 20% interest. Just be sure you can pay it off before the promotional rate expires.Another option is calling your bank to ask for an interest rate reduction. Some lenders may be willing to work with you if you have a strong payment history. Use the pay-off calculatorOur Get the Facts Data Team created a calculator to help you make a plan. Enter your card’s balance, interest rate and how much you pay each month to see how long it will take to pay off the card. Want to get back some time? Increase your monthly payment in the calculator to cut down the timeline. Then repeat for each card you have.
The holiday season is a wrap, but your credit card bills may still be lingering.
If you’re still feeling the pinch from last year’s holiday spending, you’re not alone. Acting sooner rather than later can make a big difference. Our National Consumer Unit breaks down simple strategies to help you tackle holiday debt before it spirals out of control.
Holiday spending adds up quickly
On average, Americans charged more than $1,200 over the holidays, according to a LendingTree survey.
At the same time, the latest Federal Reserve data shows interest rates are now above 20%.
That combination can make paying off a balance more difficult than expected. If you’re only paying the minimum balance each month, it could take you years to pay it off and cost you hundreds of dollars extra in interest along the way.
So here’s what you do.
Step 1: Avoid adding new charges
One way to stop the balance from growing is by not using the card while you’re paying it down.
Consider removing the cards from your apps and physical and digital wallets to reduce the convenience of using them.
Step 2: Choose a pay-off strategy
If your charges are on multiple cards, decide how to prioritize.
The avalanche method targets the highest interest rate card first, saving you the most money in the long run.
You can also try the snowball method, which tackles the smallest balance first for a quick win.
Step 3: Try to lower your interest rate
Now that you have a plan, see if you can boost your strategy by lowering the interest rate.
You can do that by transferring the balance to a new card with a 0% introductory rate. Most balance transfer cards charge a one-time fee, usually between 3% and 5%, but that can still cost less than paying 20% interest.
Just be sure you can pay it off before the promotional rate expires.
Another option is calling your bank to ask for an interest rate reduction. Some lenders may be willing to work with you if you have a strong payment history.
Use the pay-off calculator
Our Get the Facts Data Team created a calculator to help you make a plan. Enter your card’s balance, interest rate and how much you pay each month to see how long it will take to pay off the card. Want to get back some time? Increase your monthly payment in the calculator to cut down the timeline. Then repeat for each card you have.