Take These 5 Steps Out of Holiday Debt Holly Johnson January 30, 2018 • 4 Minute Read Financial Tips, Holidays Over the 2017 holiday season, Americans added an average of $1,054 in new debt. That figure comes directly from the Magnify Money holiday debt survey, which tracks the amount of money respondents overspend in their holiday shopping budget each year. Considering the fact that average household carrying credit card debt now owes around $15,654 according to Nerdwallet figures, this shouldn’t be that much of a surprise. Still, the pain can be real if you’re carrying this type of debt load. And, if you’re someone who spent more than you should last year, you’re probably looking for a way out. 5 Steps Out of Holiday Debt The bad news is, debt is pervasive, relentless, and a lot like Mogwai. If you feed it, it just keeps growing and growing as interest compounds over and over again. The good news is, there are some ways to put a lid on your holiday debt – and all your other debts – for good. If you’re angling for a way out of holiday debt purgatory, here are five steps to take today. #1: Add up all your high interest debts. No matter where you are in your debt journey, the first step out is seeing what you owe. Tally up all your debts - particularly your high interest debts – and make a comprehensive list that includes all your balances and their respective interest rates. Also take the time to tally up all the interest you’re paying across all debts each month. If you have a lot of debt or high interest rates, your interest payments alone could be staggering. From there, you can see your total debt load and breathe it in before you move on to the next step. #2: Research balance transfer credit cards. Paying interest on your debts makes everything a lot harder. Not only are you making payments toward the money you owe, but you’re setting money on fire each month by paying interest to the banks. The best way to stop the bleeding is to stop paying interest, and the ideal way to accomplish this is with a 0 percent APR credit card. At this point, you’re probably wondering how a new credit card could solve your credit card issues. Well, hear us out! Balance transfer cards offer 0 percent APR for anywhere from 9-21 months. Some also come with no balance transfer fees, meaning you can escape the interest payments you’re making without paying for the privilege. Your best bet is researching balance transfer cards to find the best deal for your needs. You may want to choose a card that charges a balance transfer fee of 3-5 percent just to get a longer offer. Or, you might want to avoid that fee and get 0 percent APR for only 15 months. Run the numbers and you decide. Either way, escaping interest is almost always a good thing. #3: Hatch a realistic repayment plan. Still, you have to be realistic about it, right? Let’s say you owe $15,000 in credit card debt. That seems like a lot, but it’s really less than the average for the average household with debt. The thing is, you may not be able to pay off this debt in 15 months (the average balance transfer offer) – even with 0 percent APR. To accomplish this goal, you would have to pay $1,000 per month toward your outstanding bills. In this case, it may pay to go for a balance transfer offer that’s good for 21 months – even if you have to pay a 3 – 5 percent fee upfront. If you paid a 3 percent fee to transfer $15,000 in debt to 0 percent APR, you would add $450 to your balance but you would have an extra 6 months to pay off debt with no interest. If you have a smaller amount of debt that can easily be paid off during a card’s 0 percent APR offer, then things get easier. Let’s say you only owe $5,000 on cards and sign up for a balance transfer offer with 0 percent APR for 15-month and no balance transfer fees. You would only need to pay $300 per month during that time to become completely debt-free. #4: Sign up for a card and transfer your balance. Once you’ve taken a closer look at how much you owe and how long it will take you to pay it off, it’s time to apply for a new balance transfer card online. Make sure to read the fine print of your offer so you understand all applicable fees and the terms of your offer. Once you sign up and get approved, you’ll want to transfer your debts to your new 0 percent APR card right away. While some card issuers will let you do this over the phone, others let you transfer balances online or through the mail. #5: Follow your plan to the end. The final step out of debt is following through with your plan to the very end. You know how long you have 0 percent APR and how much you need to pay each month to become debt-free; now you just need to push forward until the deed is done. It will likely help to cut your discretionary spending while you pay down debt. You can even look for ways to reduce your regular monthly bills such as cutting cable television or not dining out. Picking up a side hustle can also help you throw more cash at your debts every month. No matter what you need to stay on track, do it and don’t look back. The Bottom Line Holiday debt is bad enough on its own, but if you’re not careful, a few lingering holiday bills can turn into debt that lasts a lifetime. If you’re in debt, your best bet is taking steps now to nip it in the bud. If you don’t, you could be setting yourself up for an even costlier holiday season next year. Follow Us Here! #GetOutOfDebt Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. 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