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How to handle post-holiday credit card debt

| Jan 11, 2021 | Bankruptcy, Chapter 7 |

When January arrives, many people face the struggle of paying off holiday-related credit card debt. When you have a tight budget, these extra payments can make it even more difficult to make ends meet.

Review these options for credit card debt if you want to address financial challenges in the new year.

Pay more than the minimum

It can be very difficult to pay off your credit cards by making only the minimum payment. Over time, you will spend thousands more on interest than you did on your original purchases. To avoid this trap, make a realistic budget that lists all your income and expenses. Dedicate any excess funds to your credit card debt, starting with the highest-interest debt first.

Consolidate your debt

If you have a good credit score, you might qualify for a personal loan or credit card with a lower interest rate than your existing cards. In this case, transferring your balances to a consolidation card or loan could be a smart move. It will save you money on interest as long as you do not continue to accrue debt as you pay down the loan.

Consider credit counseling

When you cannot see a way out of debt, a reputable credit counseling agency can potentially help you negotiate an arrangement with your credit card companies. For example, they may agree to lower your interest rate or forgive some of your late fees. However, not every such agency provides real value for your money, so do your research carefully before paying for this type of service.

Bankruptcy can provide a solution if you have significant unsecured debt. Consider this possible pathway to a brighter financial future in the new year.

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