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How to Kick Holiday Debt to the Curb

By Dr. Lauretta A. Farrell, Executive Director, Affinity Federal Credit Union Foundation

With the holidays in our rearview mirror, consumers have something new to look forward to: credit card bills, the bane of our impulsive generosity. 

Whether it was a seasonal dessert from the corner bakery, sentimental bottle of wine or special outfit, there always seems to be something we didn’t budget for. More often than not, many Americans tend to overspend with their credit cards during the holiday season, and now it’s time to figure out how to pay off that debt.


Chipping away at credit card balances can seem overwhelming, and not everyone can afford the luxury of paying off balances in full (if you can, you should – it’s a smart financial move). A few tips can help you help you to manage your credit cards to become debt-free faster and more frugal for future holidays.

1. Transfer balances to a low-rate card. If your overspending exceeded your ability to pay in full and you used a high-interest rate credit card, you may want to consider a balance transfer to a card with a lower rate. Many financial institutions offer balance transfer promotions, which offer lower rates and lower fees. Balance transfers can help pay off high-interest debt faster, consolidate multiple monthly payments and save money each month.


2. Apply for a personal or debt consolidation loan. If your holiday overindulgence is paired with other high-interest consumer debt, a personal or debt consolidation loan is a great option. With long term fixed low rates, you can simplify your payments, pay your debt down quickly and budget more efficiently, since your monthly payment will not vary. As you pay down your debt, your FICO credit score will likely increase – which is key for obtaining a future loan for a mortgage or auto.


3. Create a designated account. It’s never too early to plan for your holiday spending needs, particularly when you’ve worked hard to eliminate debt. A designated holiday account can help you save for next winter’s shopping season. To create a holiday account, you will need to review your receipts and determine how much you spent this season. Divide that total by the number of pay periods between now and the next holiday, and that is how much you should put into your holiday account each payday.

        • For example, if you spent $2,000 on gifts and other expenses in 2016 and are paid bi-monthly, plan to deposit $100 each pay period into your holiday account. By November, you will have $2,000 (plus interest). Plus, if you automate the deposits using direct deposit or automatic transfer, you will be less tempted to spend those funds.

Starting to pay off holiday debt now and planning ahead for next year will reap long term rewards to your overall financial health. To learn more about how Affinity’s services can help, please stop by one of our branches, schedule an appointment or call 800.325.0808 and one of our representatives will be happy

Additional Resources:

  • Take advantage of a great low rate – learn more about Affinity’s Balance Transfer Promotion
  • Affinity offers various online calculators, including how to help determine how long it will take to pay off credit card debit. Learn more.
  • Learn about Affinity’s credit card options, some which offer rewards

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