A survey reported on CNBC stated that nearly 1 in 3 Americans expected to take on debt during the holiday shopping season. An increase in prices meant that holiday gifts were more expensive than ever. If you’ve taken on extra debt and are looking for a way to erase that debt for the new year, our tips can help.
1 Find a low-interest balance transfer credit card
U.S. News & World Report recently published that the average APR for all cards in the U.S. News database was 15.56% to 22.87%. The APR, or annual percentage rate, is the rate used to calculate interest on your credit card or loan. If you pay off your balance in full each month and don’t miss any payments, the APR might not have a big impact on your finances. On the other hand, if you’re carrying balances on high-interest credit cards, it probably is having an impact on your finances. If the interest on a high-balance credit card is significantly adding up, a low-interest balance transfer credit card promotion may help. Click here to learn what to consider while comparing balance transfer offers. Benchmark Federal Credit Union’s VISA Platinum Credit Card currently features 0% APR* on purchases and balance transfers for up to 12 months and no balance transfer or annual card fees.
2 Pay off holiday debt with a low-interest personal loan
Choosing to consolidate high-interest holiday debt with a low-rate personal loan is another way to save on interest going into the new year. Benchmark FCU offers both secured and unsecured personal loan options at competitive rates that are lower than the average credit card rate. Consolidating debt with a personal loan can save you money when the interest rate of the personal loan is lower than the credit card rates you are paying. In addition, the fixed interest rate of a single personal loan will help you better budget and focus on paying down debt faster than when juggling multiple credit card payments each month.
3 Prioritize Debt Payments
Whether you opt for a low-rate balance transfer credit card or a personal loan to consolidate and pay off holiday debt, it’s important that you prioritize payments. Focusing on budgeting and paying down as much as you can each month can help you get debt-free faster. If you take advantage of Benchmark’s 0% APR* VISA balance transfer promotion, keep in mind that the rate is good for up to 12 months. Your goal should be paying down the balance within that 12-month period to avoid paying interest. If you do decide to consolidate, have a focused plan. Don’t continue to rack up more debt or you are defeating the purpose of consolidating. We realize that debt can be overwhelming. With a strong focus on payments, you can tackle your holiday debt faster.
Plan ahead now to avoid debt next holiday season
Once you’ve worked on getting yourself out of debt, it’s smart to start preparing for the next holiday season. It’s not too early to create next year’s budget. The easiest way to avoid debt is to start saving now. Benchmark FCU offers many savings options to members. From holiday and vacation accounts with no minimum deposit to open and no minimum balance requirements to basic savings accounts, money market accounts, and more. Consider automating your savings. The money will be automatically deposited into your savings account before it hits your wallet. You won’t even miss it.
If you’re still struggling with a monthly budget that enables you to pay off holiday debt, it may be time to cut your excess spending and increase your income. Finding a part-time job or a side hustle may enable you to bring in the extra funds you need to pay off your debt. Learn more about boosting your income by reading our Ultimate Side Hustle Guide.
You can also learn more about debt consolidation by reading our Ultimate Debt Consolidation Guide.
*APR = Annual Percentage Rate. Rate subject to change & based on an individual’s credit history. 0% Intro Rate is valid for purchases & balance transfer from other institutions for 365 days from card opening. The 0% rate will be in effect for up to 12 months from card opening & after 12 months the rate on all unpaid balances will convert to the rate member qualified for at card opening. 0% APR promotional rate is only valid on new VISA® Platinum Cards & subject to expire without prior notice.