First Person: Managing Holiday Credit Card Debt

Yahoo Contributor Network

You're a couple weeks into the new year, the last of the holiday decorations have been taken down and the gifts have all been put away. The only thing you have not dealt with is the stack of credit card bills that have begun to arrive in the mail. Ouch!

The retail industry is geared to convince us to spend during the holiday season. This is when many of us get caught in a financial bind - running up credit card debt because our budget does not cover the expenses. The fact is, 63% of Americans surveyed said they would use their credit cards to spend more than their budget permitted. It's happened in my family as well!

The first step my family took to manage our credit card debt was to confront how much we actually owed. This gave us an inkling of what direction to go for paying it down. We reviewed our credit cards and compared balanced and interest rates.

Stop Spending

It might seem like a no-brainer, but this is the time we had to agree to stop using our cards. We paid cash for all purchases between then and the time we control of the debt. We had 2 major credit cards and 3 others for specific retail stores. We chose to pay the cards with the highest rates first, while continuing to pay the minimum balances on the cards with lower rates. We made sure we paid at least part of the principle on our cards each month; otherwise we were paying only the interest.

Here's a tip: If you were lured into acquiring new cards during the holiday season that promised low rates for a few months before they sky-rocketed, get rid of the balances before the higher rates kick in.

Transferring Balances

Most credit cards give you the option to transfer balances from your other cards. Pay close attention to the fine print. You'll want to know if there is a fee for transferring the debt, and the precise interest rate you'll be required to pay. If you can transfer the balance from other cards to one with a lower rate, do it. We moved the balances from the 3 retail store cards to one of our major cards.

Get Organized

Holiday credit card debt can knock the wind out of your sails, after having a delightful season with family and friends. Like my family, you can take charge of it by confronting your balances and planning for the most effective way to pay it down. Put any extra cash that comes into your household toward it. And start a fund right now to set aside money for this year's holiday shopping. By the time Black Friday rolls around, my family will be prepared to leave our credit card debt behind!

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