The holidays are a time of year for fun and festivity, but it is also a time when Americans take on a lot of credit card debt when compared to other times of the year. The average American took on just over $1,000 of debt during the holidays in 2016, which was an increase from $986 on average in 2015.
The first thing you need to do to start managing your credit card debt is to assess all your purchases. If you made all your holiday purchases on one card, then this will be relatively easy. However, if you spread your purchases on multiple cards, then you need to create a spreadsheet so you know which cards you need to pay off and how much interest each one carries. By doing this and following a few other key steps, you can get your finances back on track soon.
Stop inessential spending
Once January comes around, you should put a halt to any superfluous spending. There is no need to put even more on your credit cards when you still need to pay off your existing debt. Focus on paying your bills and paying for groceries until you get rid of the debt.
Use holiday bonuses wisely
You may have received a holiday bonus from your employer. Do not go out and spend this extra money frivolously. You can put it toward paying off your debt, or you can put it in a savings account to use for next year’s holiday gifts.
Create a payment strategy
If you have multiple credit cards to pay off, then you should pay off the one with the highest interest rate first. In the event you do not know if you can manage that, then you should pay off whichever card has the lowest amount of debt. Paying off debt becomes much more manageable if you are capable of taking one of your credit cards out of the equation.