information is provided by our friends at Pentagon
Federal Credit Union (PenFed).
A new year shouldn’t herald a new flight of credit card payments, but if you
got a little carried away by the holiday spirit this winter, you might be
facing a bevy of new balances arriving in your mailbox. Sure, you can resolve
to do better next year — but what can you do now to clean up the debt you’ve
Don’t skip payments. It might seem harmless enough to skip a
payment or two in the post-holiday lull, but the truth is that missed payments
hurt your bottom line. Not only will you be stung with a hefty late fee for
each missed payment, but your credit rating will take a hit as well. Creditors
will eventually charge off your debt after repeated missed or below-minimum
payments — a major blow to your credit rating.
Put a freeze on additional charging. Don’t add weight to your
low-riding financial boat. Stop charging now. The best method to curb impulse
shopping is to take your credit cards out of your wallet and lock them up until
your bills are paid off. Avoid other sources of temptation as well. Steel
yourself against kicking in a little extra cash to push that gift card you
received over the top for an item you really want. Unsubscribe from sales
notices from your favorite stores, and delete deals apps and alerts.
Turn unwanted gifts into cash. Return unwanted gifts before
store time limits run out; the sooner you go, the more likely you are to
receive cash back instead of store credit. And did you know you can sell
unwanted gift cards for cash? A few reputable sites are easily found online for
doing just this.
Transfer balances to credit cards with a lower rate.
Consolidating your debt at a lower interest rate saves you money and lets you
more easily see your progress paying it off. PenFed offers low balance transfer rates
on credit cards that will help you pay down the balance on higher-interest
Consider a loan. PenFed debt
consolidation loans offer an incredibly low rate. You might also be
eligible for a PenFed
personal line of credit or personal
loan to help repay your debt or manage your ongoing expenses.
Pay more, and pay it now. Always pay more than the minimum
payment you owe, and don’t wait until next month if you find you can add just a
little bit more. The more you pay now, the less you’ll pay out in interest and
the faster you’ll erase your debt.
Snowball credit card payments. If you can’t consolidate debts
on one lower-interest card, “snowball” your payments. Make the biggest payment
you can on the bill with the highest balance while keeping up minimum payments
on the others. Then once the highest balance is paid off, roll what you would
have paid on that bill into your payment on the bill with the next highest
balance. The payments get bigger and bigger as you pay off cards. This
focus-fire method is more effective than spreading your payments out over
Keep an eye on your progress. Nothing feels better than
success, so make a chart or a spreadsheet or whatever it takes to help you keep
watch over your progress. Reward yourself for reaching particular milestones
(say, every $500 of a $2,500 debt) — as long as that reward doesn’t have to go
on a credit card!
Don’t dip into other savings to pay off holiday debt. As
important to your well-being as it is to dig out from debt, don’t dip into the
wrong resources to pay off holiday bills. Never raid your retirement fund or
commit to a payday or car title loan; your long-term financial stability is
Open a holiday savings account for next year. Nothing beats
starting a new year with no debt. Start saving as soon as you’re out of debt
from this holiday season. Even a strategy as simple as earmarking cash you’ve
slipped into your regular savings account can make all the difference.
Smart saving and money management all year long can help you avoid the
holiday crunch altogether. The sooner you take charge of your finances , the
sooner you’ll be able to splurge on gifts for others during the holidays
without sabotaging your finances for the following year.