A new year means new beginnings and a clean slate. But when holiday debt lingers like the ghost of Christmas past, it can be hard to make a fresh start. If you’re still paying the price for your holiday spending, you’re not alone. We have some tips to help you pay off that holiday debt faster.
Transfer Your Balance
Many credit card companies offer balance transfer promotions at the beginning of the year, which allow you to transfer the balance on your high-interest credit cards to a new card with a lower interest rate.
Consider Your Payment Options
If you have more than one credit card, it can be challenging to decide which to pay off first. Here are two strategies you can try.
Pay off the balance with the highest interest rate first, while making the minimum payments on the rest of your bills. This lowers the amount of interest you pay overall.
Pay off the smallest balance first, while making the minimum payments on the rest of your bills. Once you’ve paid off the smallest balance, you can move on to the next smallest. This allows you to set small, achievable goals and gradually work your way up to paying off your larger debts.
Choose the strategy that works best for you and stick to it. To reduce your debt, you’ll need to make sure that your payments cover the current month’s spending, plus as much of your past spending and interest as you can afford to pay off each month.
Consolidate Your Debt
If you’re finding it overwhelming to keep track of all the credit and store card bills you need to pay, you can consolidate all your balances into one card or loan. Consolidating your balances might make your debt feel bigger, but actually, it gives you a true picture of how much you owe. It’s also much simpler to manage a single payment, and you can easily see where you stand. Take a look at several options for consolidating your debt.
Pay More Now, Pay Less Later
If your goal is to become debt-free faster, you’ll need to make more than the minimum payment each month. It may feel like making the minimum payment will keep you on track, but interest keeps building on your remaining balance each month, which means that you’ll pay more in the long run.
For example, if your credit card balance is $2,000 with an interest rate of 17%, your minimum payment each month would be around $40. If you only pay the minimum balance each month, it will take you more than 7 years to pay off your entire balance, and you’ll end up paying around $1,500 in interest.
And if you continue to spend and add to your balance, it will take even longer to pay it all off. The more you can pay above the minimum amount due, the more you’ll save in the long run—and the sooner you’ll be debt-free.
If you want to talk with us about how to manage your debt, we’re here to help! Just visit your local VyStar branch or call us at 904-777-6000 or 800-445-6289.