AGAWAM, Mass. (WGGB) – For many of us, the holidays give the plastic in our wallets a lot of exercise.
“The average consumer spends about $800 during the holiday season on gifts and mostly that is utilized by their credit cards,” John Szalicki, Senior Credit Counselor with Cambridge Credit Counseling, told us.
According to the most recent statistics, 75 percent of Americans have at least one credit card with a balance that they aren’t paying off at the end of the month. The average person is about $5,000 in debt, and the average household, $15,000.
So it’s no surprise that when those bills start coming in, you may want to stick your head in the sand.
“We tell people when the bills come in, in the beginning of the New Year don’t ignore them. A lot of people tend to ignore them and it just makes things worse because fees can accrue and penalties,” Szalicki explained.
But there are ways you can chip away at your credit card debt.
“You can contact your credit card companies directly and try to work out a plan with them,” says Szalicki.
A good way to manage your credit card debt may be to transfer your balance to a new card with either a low or even 0% interest rate. Just be sure that before you do that you know about any transfer fees, and how long that lower interest rate may last.
If you can’t get approved for a new card with a low rate, there’s at least one strategy you can try.
Szalicki says to focus on your card with the highest interest rate first.
“Pay as much over the minimum as you can and kind of do a snowball technique, when that one gets paid off, go to the next one and the next one and try to pay it off, ideally within three months if you can.”
But the best plan may be to just be proactive instead of reactive.
“Start saving even $25 dollars a week, start saving that now, and within a year you’ll have $1200 which is, according to the statistics, more than enough to cover your average spending around the holidays,” said Szalicki.
Even if you can get your balance transferred to a new card, Szalicki told us you should still pay more than just the minimum payment, so you don’t get stuck with the same problem again.