Tis the season for credit card debt, but dont fear: Weve got you covered with a list of some of the top digital tools to help you dig yourself out of that financial holiday hole.
The average consumer is expected to spend more than $800 on gifts for Christmas, Hanukkah and Kwanzaa, according to the National Retail Federation. That doesnt include the wallet-walloping impact of all those family gatherings and festive home decor.
But lucky for you, the digital revolution delivers with some credit-control solutions, my favorite of which is the website ?MyFico.com.
If youre not a subscriber to MyFico, youre missing out. For the past 10 years or so, Ive benefited from its monthly credit tracking service and credit score simulator tools.
For $19.95 a month, MyFico will monitor your credit score and advise you how to repair your credit. Youll see a list of the factors impacting your credit score, gain the ability to calculate the best way to pay off your balances and how long that will take.
MyFico also rates the best credit cards and lists balance-transfer deals available to you, which leads me to my next tip.
For whatever reason, balance transfers are almost entirely found and initiated online. For instance, the Discover it card is now offering 0% APR on balance transfers for 18 months, with a 3 percent fee applied to the transferred amount. If its going to take you months to pay off your holiday debt, you should look into an online balance transfer and calculate whether that 3 percent fee is less than the cost of the current APR on the credit card youve charged up.
Now, lets say you decided to be Mr. or Mrs. Claus and are really staring down a barrel of serious financial problems. Your APRs could be so high at this point that it actually makes sense to take out a loan. I know that sounds crazy going into debt to pay off debt.
But theres an intriguing service founded by some Google alums that may be worth your consideration. Upstart.com is a peer-to-peer lender that is targeting highly educated people with a good work history and debt ie, student loan debt. With APRs starting at 5.7 percent, upstart.com appears to provide an elegant solution in the face of a greedy Wall Street that doesnt much care that were churning out a generation of Americans that will never be able to buy a house.
The last solution Im going to suggest is like a digital financial consultant at your fingertips: Mint. Go to mint.com and input information about your credit cards and bank accounts and voila youll have your entire financial outlook in real time, for better or worse. Ironically, this tool may help you decide that its time to forgo some of these 21st-century tools for something a little more time-tested: a pair of good ol fashioned scissors.
Holiday shopping is a wonderful experience, until the credit card bills start rolling in. Once the joy of the giving has passed, you stare at the painful task of paying the bills. There are several ways to recover from holiday credit card debt in order to get back on your financial feet.Prioritize Your Payments
A handful of credit cards give you the opportunity to skip a payment in January or February. If one of your cards has this option, focus on paying off more of the balance on your other cards.
If you have one credit card with a higher interest rate, make the minimum payment on the low interest cards and apply as much money as possible toward the principle on the high interest card.Consolidate Your Debt
If you have accumulated credit card debt on multiple cards, you may want to consider consolidating all of your balances into one card or loan. In doing this, you have to compare the fees of the transfer to your current interest payment. If you already have low interest rates across the board, it may not make sense for you to consolidate. You just need to make your payments on time.
Consider the balance transfer fee on any card you use for consolidation. This is a fee that is added to whatever balance you are bringing over from another card. A handful of cards, such as the Chase Slate card, have no balance transfer fee if the transfer is made within a certain period of time. In this case, you can transfer the balance without incurring additional expenses.Pay More Than the Minimum
If all you do is pay the minimums on your credit cards, you are going to be riddled with debt for years. Instead of doing that, you need to put as much money toward your balance as possible. This may be something as small as $10 extra every paycheck, but paying these additional amounts will benefit you over time.
Also, make micropayments throughout the month. Every time you have some extra cash, apply that money to your credit card balance. Making these additional payments during the month are very beneficial to paying down your debt.Make Biweekly Payments
If you pay a certain amount toward your credit card balance each month, try making half a credit card payment every two weeks. By doing this, you will make one extra payment by the end of the year. Paying once a month only means you will be making 12 payments. If you pay once every two weeks, you will be making 26 half payments, which equates to 13 full payments.Make Personal Sacrifices
You got a chance to splurge for the month of December. Now its time to cut back and regroup. You might be tempted to take advantage of first-of-the-year sales, but you need to recognize the current state of your finances. Rather than buying that awesome pair of shoes you saw at the mall, you can put that shoe money toward your credit card balance.
If you do not feel you can control your spending, avoid the temptation entirely. In the example above, you might not want to go to the mall for a month so you do not see shoes you feel you have to have. Aside from food and shelter, you dont need anything. You just have to realize when your wants are taking over.
Think of this whole process as a step toward a better future. You will feel so relieved when you finally pay off your credit card, and then you wont have to think about this burden. Use the tips above to recover from holiday credit card debt, and you will be free in no time.
Are we getting ourselves in trouble again with credit cards?
A CardHub study on shows that credit-card debt has risen for four straight quarters. The nearly $16 billion increase in the July 1-Sept. 30 quarter is a 35 percent increase over the same period in 2012 and CardHub now projects that consumers will rack up more than $60 billion in new credit-card debt this year or about 55 percent more than 2013.
There is growing concern among senior executives in the auto and financing industry about long-term loans that some car companies are offering to entice buyers and boost sales.
Auto consumers have been increasingly attracted to long-term loans with low monthly payments. But industry executives are worried that customers will return to showrooms before the seven or eight-year terms of their loans have been completed and find that they owe more on the their vehicle than what it's worth as a used car.