By now most of us have kicked the Christmas tree to the curb.
We’ve returned all our unwanted sweater vests, thrown out the fruitcake and took down the lights hanging outside the house.
But there could be a part of the holidays that lingers on for months and months…your debt.
Maybe you promised to keep your credit card in your wallet. You set limits for yourself. Then things started getting a little out of hand.
You could make up some excuse like you just couldn’t help getting caught up in the spirit of giving! But in the end, you’re seeing a much bigger number on those balance statements while the size of the checks you write to pay the bill stays the same.
A poll conducted by Consumer Reports found that around 13.6 million Americans were still paying off 2009′s holiday debt at the end of 2010!
Using plastic to pay usually puts holiday shoppers in the hole. The Consumer Reports study found those who used credit cards to do their shopping went over budget by an average of $180. That’s $85 more than shoppers who stuck to cash or personal checks.
Almost half of holiday shoppers said they planned to set a holiday shopping budget in 2010. But nearly 40% of the people who made a budget in 2009 told Consumer Reports they actually exceeded it.
The infographic below from GoBankingRates.com helps paint the picture.
The holidays are probably the toughest time of the year to stick to a budget.
I’ve often found myself saying “It’s Christmas,” and then whip out the credit card hoping I’ll be able to deal with the debt later on. Retailers lure you in with sales that are just too good to pass up. But that’s not always true!
If that great deal sits on your credit card for all of 2011, you’re going to end up paying quite a bit more than the sale price thanks to the interest that will most likely be added to your credit card bill.
So now what? We’re already more than halfway through January, and you didn’t get that time machine that was on your Christmas list, so it will be pretty tough to go back to last month and make sure you stick to your budget.
Here are a few tips to lessen the blow…
Pay-off Store Credit Cards ASAP- These cards usually have a higher interest rate and lower credit limit. You probably used them during the holidays because it helped you get an extra 20% off – or something like that. But if you don’t pay down that debt as soon as you can, you’ll only end up paying more than you thought you would save.
Always Pay More Than the Minimum – When money is tight, it’s easy to see that minimum payment on your credit card statement and think about how much you could use the extra money. But once again, it’s only going to mean you pay more in the long run.
Take a look at your current financial situation and figure out what type of fixed monthly payment you can afford. If you can cut back in other areas and add an extra $20 to $50 the payment you’ll dig your way out faster.
Look at Your Options – If you’ve got multiple credit cards to repay, it might be smart to consider doing a balance transfer to the card with the lowest interest rate. There are often fees for doing so, but you can also find offers for 0% interest on balance transfers for set amounts of time.
You’ll have to sit down and crunch the numbers a little bit to make sure you’re making the right decision. Above all, make sure you pay off the total of your balance transfer before the promotional period ends.
You can also try calling the credit card company, explain you’re making an honest effort to pay down debt, and ask if it would be possible to reduce your interest rate. A little negotiation can make a big difference.
Our friends from Sesame Street remind us to keep the spirit of Christmas with us all through the year. Just don’t keep your Christmas debt with you until the next holiday season rolls around!
Image: dream designs / FreeDigitalPhotos.net
Kasey Steinbrinck provides helpful personal finance tips on behalf of online check printer Check Advantage. Visit the site to order checks online including Animal Checks and Retro Checks. Get free content for your blog or website when you contact Kasey for more information.
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For this reason check to see what your credit limit is for that particular card. If the car exceeds the maximum contact your credit card company and ask them to raise your limit.
Ingrid – I’d have to say that if you’re exceeding the maximum on your credit card you shouldn’t be using it. Plus, you really ought to know what your credit limit is – especially if you’re going on a spending spree with piece of plastic.