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How to Manage Credit Card Debt When Holiday Shopping


And, he advised, include savings on your list of “expenses” and set some money aside. That way, you’ll have some reserves when those vacation bills come due.

Here are some questions and answers about managing holiday expenses and debt:

Limiting card spending is especially important because interest rates are rising, which means it will be more expensive to carry over balances from one month to the next. The average credit card rate is over 19%, up from around 16% at the start of this year, according to Bankrate.

Buy now, pay later services, including Afterpay, Affirm and Klarna, are becoming increasingly popular. More than a quarter of Americans have used them, and most are happy with them, according to a new Consumer Reports survey. Short-term loans, usually offered online at the point of sale, allow borrowers to pay part of the purchase up front and pay off the balance in several fixed installments.

But it is necessary to be careful in the use of the services. Users may not consider this a form of credit, but, Ms Ellis said, “it’s still a debt”. Loans are easy to get, so people can take out several and then have a hard time juggling them. Consumer Reports found that people who had four or more loans at a time missed payments twice as much as those who had fewer loans. The survey also found that 10% of people who used these services said they had trouble getting refunds or stopping payments for items they never received.

If you can’t pay your balance in full, pay more than the required minimum payment. Otherwise, you’ll take longer to clear your debt and pay a lot more interest. “Have a rule of thumb,” Wright said, like paying $10 more than the minimum or double the minimum.

A series of studies by researchers from institutions such as The Ohio State University found that people who were able to choose particular purchases to repay — like a coffee at Starbucks or a utility bill — paid more to lower their debt. The technique increased awareness of what was being repaid, leading to a perception of greater progress towards debt reduction, according to a report on the experiments.

Grant Donnelly, an assistant professor of marketing at Ohio State and one of the report’s authors, said some credit cards, including offers from American Express and Chase, give users the ability to choose purchases. specific to pay over time. But they may charge a fee to set up the payment plan.

nytimes Gt

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