Paying Off Holiday Credit Card Debt

The holiday season is long over, but for most, the credit card statements have arrived, showing every dollar we spent in December.  If you racked up hundreds or even thousands of dollars in credit card debt over the holiday season, take into account the following:

1.  How Much Debt Do You Have…and Why? While it wasn’t a smart move to have racked up hundreds or even thousands of dollars in credit card debt, what’s done is done.  The fact is, you have this credit card debt, which resulted from purchasing holiday gifts for friends and family, who will probably forget about those gifts by next year!  Be honest and determine exactly how much debt you’re in.  Write it down on paper and recite it every night.  Get determined and psyched to tackle your debt.

2.  Get Those Interest Rates Lowered: What makes credit card debt so financially damaging are the expensive interest payments.  Call up all of your credit card companies and ask them to lower the interest rates on the cards – ask to speak with a supervisor if need be.  They should lower your rates by 2-3%.

3.  Pay MORE Than the Minimum: This is the most important rule!  For example, if you have $5,000 in credit card debt with an interest rate of 26%, your minimum payment will be about $160.  By only paying this minimum payment, it’ll take you over 24 years to pay off this debt!  But let’s say you double the minimum payment each month and you pay $320 per month.  By paying $320 instead of $160, it will take you less than two years to pay off this debt!  Think about how much money you’ll save in interest by paying more than the minimum.  Even if it’s only $5 or $10 more, that’s still a huge difference.

4.  Focus on the Highest Interest Rate: Start paying off the credit card with the highest interest rate first.  After all, this card is costing you the most money, so it’s important to pay this card off as soon as possible.  Once that card is paid off, start tackling the card with the next highest interest rate, and so on, until all of your cards are paid off!

Visit HelpSaveMyDollars.com’s Credit Card section for more tips on paying off debt

Tags: cards, credit card companies, credit card debt, credit card statements, friends and family, highest interest rate, holiday debt, holiday gifts, holiday season, how much money, how to pay off holiday debt, interest payments, interest rates, minimum payment, supervisor, thousands of dollars

This entry was posted on January 27, 2011 at 9:00 am and is filed under Credit Cards, Debt, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed.