It's the middle of January, which means most of us are starting to see those post-holiday bills start to show up in our mailboxes and online balances. This is not the most wonderful time of the year, but it is one of those periods that's most crucial to maintaining your credit and keeping that holiday debt from snowballing into something too big to handle.
With the average consumer spending $854 on holiday gifts alone last year (according to the American Research Group), there's a good chance that some of us are scrambling for a way to pay back that holiday debt quickly, before interest fees takeover.
Luckily, there are some things you can do to expedite the process of paying back holiday credit debt. Just remember that paying your credit debt back is a top priority, since maintaining a good credit score is crucial to paying low interest throughout your life. With that in mind, here's five easy ways to pay back your holiday debt FAST.
- 1.) Transfer your balance
If you're racking up interest on your credit card from those Black Friday purchases, then maybe it's time to consider transferring your credit card balance. That way, you can start paying back your debt directly, interest-free while opening up a new line of credit – both of which can also help improve your credit score.
This is especially helpful for consumers that are getting nowhere on their credit card balance by paying back the minimum payment each month. Plus it's simple to perform and the benefits immediate.
All you need to do is choose the right balance transfer credit card for your budget based on the length of the zero interest intro period and the overall benefits, apply and receive your new card, initiate the balance transfer with your new credit card company (this will likely cost a 3% fee of the total balance) and begin paying back your credit debt immediately.
This will not only help you alleviate holiday credit debt, but you'll save a ton of money in interest for months to come.
- 2.) Cash in on cash back
OK, the easiest way to pay down your credit card debt quickly is to simply pay back more each month. That's obviously easier said than done, especially if your income remains the same. But one way to add a little supplemental income in the new year is to redeem the money earned on a cash back credit card.
For instance, maybe you have $100 cash back accrued on your credit card. Wouldn't an extra $100 paid back on your credit card balance make a significant difference? (Hopefully, it does.) So, where's the harm in simply redeeming your cash – or applying it directly – to your credit card balance? This way, you're using supplemental “income” (a term used loosely here) to help pay down your debt.
Speaking of supplemental income...
- 3.) Redeem those gift cards
So you want to cut back on purchases, but still want to enjoy a night or two on the town each week. We get it – YOLO, right? (Feel free to google YOLO, if you missed the boat on that last sentence.)
Well, if you have an unimaginative cousin or aunt, or were involved in any number of White Elephant or Secret Santa situations last month, then odds are you've got some gift cards to redeem. And while you may have gritted your teeth through that smile while accepting a $30 gift card to Applebee's, there are some seriously worse places to find yourself on a Friday night – just ask the natives of Dillon, Texas if you don't believe us!
Save your cash for your credit card bills, and redeem those gift cards for a night out. It's all about keeping your eye on the prize when it comes to paying down debt.
- 4.) Stop charging...
Let's face it; it's going to be tough to pay back your credit card debt if you keep adding to it. Put a stop to spending for a few months and it's inevitable that you'll see a legitimate decrease in your overall credit card balance.
We know that emergencies come up and the buy now, pay later convenience of the credit card is enticing, but it's only going to make things worse down the road. Excuse the cliché, but paying back holiday debt is akin to ripping off a band-aid® - it's going to hurt for a second, but once the pain subsides you'll be feeling a whole lot better than you did before.
- 5.) Pay down the card with the most interest first
If you spread the shopping around a few credit cards last holiday, then it's smart to prioritize how you plan on paying back these cards. The best way to do this is to pay off your holiday debt carrying the most interest first.
Make your biggest payments on your highest interest cards – and if you were roped into a retail credit card at the check-out counter for a quick 20% discount, it's probably that card – and make smaller payments if need be on those lower interest cards.
And as we mentioned before, you can consider transferring some or all of that debt to a new, 0% interest credit card; whatever it takes to pay down your debt quickly without missing a payment due date.
Once your journey back from holiday debt is complete, you can really enjoying that Black Friday flat-screen you brought. Alright, you're probably enjoying that anyway, but you get the idea...