Providing Debt Relief for Clients Throughout the State of New York

Handling Holiday Debt

With the holidays rapidly approaching, it can be easy to get caught up in the exciting spirit of gift giving and party hosting. That is until your post-holiday credit card bill shows up at your door. According to a recent survey, Americans currently in a relationship are willing to take on an average of $200 in credit card debt for a gift for a holiday significant other. Additionally, one in three Americans have used a credit card to buy a gift in the past that they could not pay off immediately. In a similar study it was found that middle-income households will take an average of three months to pay off their holiday credit card debt.

There are several ways to avoid credit card debt this holiday season and it begins with properly planning holiday spending. It is important to recognize that credit cards should be treated as if they were cash. Consumers should try not to spend more on their credit cards than they can afford to pay at the end of the cycle. Additionally, setting a spending limit with appropriate ‘wiggle room’ for unexpected holiday expenses may help consumers cap their budgets at an affordable level. Spreading out credit card bills from holiday shopping to a period over one month may also make the total payoff manageable.

When using credit cards for holiday shopping, education about APR offers and cash back reward programs, as well as paying on time are key aspects of limiting debt and corresponding stress during the holidays. Credit cards with introductory 0% purchase APR offers allow consumers to pay their balance over several months without interest. While this type of card could save a consumer hundreds of dollars in interest, it does come with risk. Planning is also key when it comes to this type of card and consumers must calculate how much they can put towards monthly credit card payments. Additionally, 0% APR does not mean that payments may be skipped. If a consumer does not pay at least the minimum on each statement, there is a risk that the issuer may rescind the 0% APR offer and may require the consumer to pay a late fee.

Most credit cards allow users to participate in cash back rewards programs. If a consumer’s holiday shopping is done on a credit card it is highly recommended that they enroll in a reward program, if offered, that way they can earn points for spending that can be in the future on gifts, travel, or in certain cases payment on major websites such as Amazon.com. The Federal Trade Commission also recommends that consumers look for in-store and mail-in rebates and compare prices for items sold online and locally in stores to save money while shopping.

The Federal Trade Commission’s top holiday shopping tips can be viewed here.