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How to pay Christmas credit card debt

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There are more expectations set on January 1 than any other day of the year. It is the first day of new diets, new habits, new gym routines and new budgets. All those new year resolutions come into force now.

There is more
expectations set in January first than any other day of the year. Is he
First day of new diets, new habits, new gymnastics routines and new budgets. All those
New Year's resolutions take effect now.

Unfortunately, most of
we are still so busy recovering from vacations that we can't really start
the new Year. It's easy to get buried by holiday debt: the combination of
Stress, obligations and deadlines can make it difficult to meet a budget.
According to MagnifyMoney, 44% of consumers reported having assumed holiday debts
2019.

If you are one of the
Many have debts from 2019 to 2020, here are some ways you can work to pay
down.

1. Know what you should

The first thing to do is to know exactly how much you owe, to whom you owe and when your payments are due. When it comes to credit card debts, it is easy to feel overwhelmed and let it get out of control. The more organized you are, the less likely you are to miss an invoice and let it take you by surprise in the future.

Once you know how much you owe, set a schedule and a budget for you.

There are also tracking tools that you can use that measure your progress, such as mint, Pocket protector or Credit.com (which are free)

2. Pause in the use of your credit cards

While working to pay off your credit card debt, stop using your credit cards to make payments. If it takes months to pay your credit card debt, you can consider changing any automatic payment charged to your credit card to another form of payment.

3. Prioritize high interest cards

Credit card debt is one of the most difficult types of debt. Due to its high interest rates. If you have debts on several credit cards, consider prioritizing the cards with the highest interest rates. A word of caution: Once you have paid for the card, do not close your account. Your credit utilization rate (the amount of credit available for the amount of credit used) affects your overall credit score. If you close your credit accounts, it can negatively affect your credit score.

4. Make a monthly payment as big as you can

The way you break down your debt payment plan in the coming weeks or months will differ depending on who you ask. Discover recommends dividing the general debt into a four month payment plan. In a article for the New York Times, different financial advisors recommended paying a monthly payment as large as possible, making biweekly payments or working to pay off the debt within 90 days.

Regardless of the schedule you choose, most recommend that you determine a set amount of time to pay off your debt and then devote your resources to paying as much as possible instead of making minimum monthly payments.

5. Take advantage of any tax returns, holiday gifts or bonuses

Fortunately, vacations are not just a moment to give. And although it is not what you expected to spend your vacation money or on your bond, you could use your unexpected gain to pay off your debt. Tax returns are also only a few months away, and depending on the size of your return, it could be helpful to pay off your debt.

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6. Consider a balance transfer

If you have a large amount of debt on a credit card with a high interest rate, you can transfer your balance to another card with a lower interest rate.

Most credit cards offer an introductory rate of 0% APR for a limited time (usually between 12 and 24 months). If you decide to apply for a new balance transfer card, make sure you know exactly when the introductory 0% APR rate ends and that you can pay your debt before the end date.

Note that some credit card companies do not allow you to transfer balances between cards from the same issuer. A balance transfer will not directly affect your credit score, but if it affects your credit utilization rate or if you lose a payment, you can do so.

7. Look for a personal loan

Personal loans are similar to a balance transfer in the sense that you are not reducing your debt, you are only moving it. Interest rates on personal loans are usually cheaper than interest rates on credit cards, and you can usually borrow more than once. Unlike a housing value Credit line, which you insure with your home, personal loans are usually a type of unsecured loan.

If you have a large amount of debt, too much for a 0% APR credit card, you might consider a personal loan as a way to reduce interest rates and consolidate your debt. If you are thinking of taking the personal loan route, be sure to shop around. Different lenders will offer you different loans at different rates.

8. Try to negotiate with your credit card company

If you are buried by the holiday credit card debt and cannot make even your minimum monthly payments, try calling your credit card company and negotiating with them. In some cases, particularly if you have a good record as a borrower, they may offer you patience or a training agreement, although there is no guarantee that they will agree to negotiate with you.

Negotiating with your credit card company will not adversely affect your credit score.

9. Make a plan to avoid vacation debt in 2021

During 2020, you could prepare financially for the next holiday season by:

  • Save during the year for a vacation fund.
  • Make homemade gifts.
  • Buying gifts throughout the year. If you have a particular gift in mind, you can track when it goes on sale. Not only will this help you avoid paying bulk vacations, it will also make your holiday season much less stressful.

10. Seek help

If you have a serious and overwhelming credit card debt, consider seeking professional help. A financial advisor, or a nonprofit credit counseling organization, will help you explore different options for managing and paying off your credit card debt. If you are a student, veteran or a higher, you can find additional resources to pay debts.

If you are concerned about the negative impact your vacation debt will have on your credit score, or if you find any inaccurate item on your credit report, consider contacting Lexington Law.

Do not borrow during the holidays

Spend your vacation next year to spend time with the people you care about, instead of constantly worrying about how you will pay everything when you finish. Take a resolution now to have a better holiday season this year and not get into debt.

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