4 Tips for Paying off Credit Card Debt this Holiday Season
The Holiday Season is a great time for gift giving. But also an easy way to rack up debt.
We’ve all felt some pressure during the holidays to spend, and it can be easy to overspend without really noticing the bills piling up.
We typically see a spike in credit card debt in the New Year, and with this year closing out with high inflation and higher rates it’s incredibly important to keep track of your expenses so they don’t become a mountain of debt in the new year.
Here are some tips for helping to pay off that debt quicker:
1. Figure out how much debt you actually have.
Seems pretty simple right? Maybe. But many Canadian’s try to keep a running tally in their head that is typically much less than their actual debt. So when the bills come in the mail they are shocked by what is actually owing. Best to know what you are up against
2. Stick to a budget
This could be one of the many apps available to help you budget for the holiday season, or as simple as the envelope system. Either way you need to set a realistic budget and try to stick with it.
3. Try paying off the lower balances first
This technique is known as the ‘snowball effect’ and can help both mentally (who doesn’t love a big fat zero on your credit card statement?) and setting an achievable target
4. Consolidate the debt with Your Mortgage.
Renewal Coming up? If you have a mortgage coming up for renewal you can always look at consolidating the debt into your mortgage. With most credit cards having an interest rate close to 20%, taking that debt and moving it into a mortgage that is around 5% (as of today) not only saves you interest, but frees up your cashflow. Use that extra cashflow to make lump sum payments on your mortgage and you’ll be paying off that mortgage in no time.
p.s. whatever your course of action you are taking, make sure to never miss a payment as that will negatively affect your credit score, and can ultimately hurt your mortgage approval process down the road.
