I hope you all had an amazing Thanksgiving. With Black Friday and Cyber Monday deals coming to an end you may have spent more than you anticipated. This may be a bit of a setback for you, considering your high interest credit card rates and trying to stick to your savings goals. On top of that I’m sure you still have Christmas shopping to do. I know I do! Trust me; you’re not alone in this. I used to over spend every year. A matter of fact, according to USAToday.com the average American household carries $137,063 in debt, according to the Federal Reserve’s latest numbers. But here are some tips to help you eliminate some of that holiday debt this season:
1. Pay down the credit card balance with the highest interest rate:
The higher the interest rate the more money you have to use to pay off your principal balance. So when paying the principal balance you have to pay your balance and the interest. For example, if your interest charge is $25 this pay period and your minimum payment due is $50 then I suggest paying at least $75 because you are paying the interest charge and putting money toward your accrued balance.
2. Pay off the debt with the lowest balance:
The lower the debt the easier it is to pay off. Let’s say you have two credit cards, one with a $5,000 balance and one with a $1,000 balance. It’ll be so much easier and quicker to pay off the $1,000 balance. You can set up a payment plan for yourself to pay as much as you can, as often as you can. Of course you still have to make a monthly payment on the credit card with the $5,000 balance but be sure to put more money toward the $1,000 balance. Once the card with the lower balance is paid off you have one less thing to worry about. I promise you this will work!
3. Make a credit card payment as often as you can:
Even though we are required to make one monthly payment we can pay as much as we want as many times a month as we want. You should pay off as much as your budget allows you too. For example, if you have $500 to yourself after paying your rent, car note, phone bill; etc. take $50 and put it toward your credit card. This will help you pay your balance off faster which eliminates one less bill to worry about.
4. Consider doing a balance transfer:
A credit card balance transfer is the transfer of the outstanding debt in a credit card account to an account held at another credit card company. It’s a good idea to do a balance transfer if you have a high interest rate because most banks offer you a credit card with little to interest. This means you are only paying off your balance. Balance transfers can help your credit score because the smaller your balance is compared to your credit card limit the better. But be careful! Balance transfers can hurt your score if you’re applying to multiple cards at a time. Every credit score check from a creditor/bank is a hard pull and hard pulls can lower your score.
Meet the Writer
Jasmine Barlow is a twenty-six years young woman born and raised in Staten Island, New York. She graduated with her B.A in Mass Communications from SUNY Oswego. Jasmine currently works in finance but is passionate about writing. She recently launched Wolrab On Wednesday, a discussion forum to engage both young men and women in discussions about taboo topics. Check her out on Instagram: @wolrabonwednesdays & @wolrab_ .