Getting your finances in order is a good idea as you gear up for the holidays, especially if you don’t want to deal with heaps of credit card debt in the new year.
With credit card interest rates currently at 24.72%, here are some mistakes you may want to avoid.
1. Not Paying More Than the Minimum
When you have more credit card debt than available credit, your credit score takes a hit. That’s why putting more money on your cards than just the minimum each month is important, especially if you plan to use your cards during the holiday shopping season.
2. Depending on Interest Rates Going Down
While the Federal Reserve cut the target interest rate in September, the impact on credit card interest rates is minimal. Since you’re not going to see any significant reductions soon, you should continue to pay toward your balance and make plans to pay it off.
3. Letting Interest Build
Paying off a credit card can be hard, but it’s even harder when you carry a balance month-over-month. Interest can make a manageable amount of debt balloon out of control fast. If you’re having trouble paying off your card each month to avoid high interest rates, try transferring your balance to a card with a 0% introductory rate or talking to your lenders about reducing your current interest rate.
4. Rack Up Shopping Debt
If you like to be prepared and shop early for your friends and family, remember to make a holiday budget. While spreading out your shopping early can help you manage your funds with more ease, it’s also easy to get carried away and swipe that card a few too many times.
5. Fail to Get Help
If you’ve maxed out a card, you’re not alone. Bankrate reported that 37% of cardholders in the U.S. have maxed out a card or come close since 2020. Now may be the time to ask for help by meeting with a credit counselor, who can help you work on a budget and enroll you in a debt management plan. Through this, they’ll work with your creditors to consolidate your credit cards into one affordable monthly payment at a reduced interest rate.
Bottom Line
By avoiding these mistakes, you can focus on your friends and family this holiday season without the anxiety that debt can bring.