Make Ends Meet: Thoughts of holiday debt still linger in spring
LOUISVILLE, Ky. (WAVE) - As we gear up to revel in the warmth and beauty of spring, a new survey revealed many Americans are caught up in worry and regret from lingering debt from the holidays of 2021.
According to an early 2022 survey done by personal finance technology company MoneyGeek, 40 percent of Americans still have not paid off their 2021 holiday debt.
If there are struggles paying off holiday bills, remember to “ho-ho-hold” on next time before swiping that credit card. If it is too late for that, it is time to pay the piper as soon as possible.
“On average, Americans spent $1,131 on the holidays and they put most of that spending on a credit card,” Doug Milnes from MoneyGeek said.
More than one-quarter of Americans surveyed regret their level of spending. Shoppers aged 25 to 44 expressed the most regret over their holiday spending, and more women regretted their spending than men.
“Forty percent of all respondents to our recent survey put over 90 percent of their holiday spending on their credit cards,” Milnes exclaimed.
Shoppers may say the reason to have a credit card is for all the things they cannot afford, but they may want to think again.
Use a credit card carefully. A credit card purchase is a loan to yourself. The loan must be paid off quickly or the interest owed for that loan will begin to build.
“For some folks, that holiday debt’s never gonna go away,” Milnes shared. “It’s going to become part of their credit card balance they’re working to pay off. They’re going to continue to incur charges on it.”
Credit card owners get charged more money for the balance left on a credit card.
Fees will be added to the balance, and if it’s not paid off the following month in full, shoppers will end up paying interest on that balance. It just keeps adding up.
“It’s a compounding interest payment, so it’s really in your best interest to get those credit card balances down as quickly as you can,” Milnes stressed.
Before someone “bah humbugs” the December giving spirit, there are things that shoppers can do.
Using a credit card is not the problem, however, not paying the card off each month is when the issues begin to arise.
Do not charge more than can be paid off in any given month. Interest fees can be avoided while building up a credit score will allow shoppers to enjoy the benefits of using a credit card.
“You can understand what you spent on the holidays this year, then make a plan to sock away money somewhere else,” Milnes shared.
The old-fashioned Christmas Club Accounts are still extremely popular with credit unions and smaller banks. People can also start a savings account at a bank of choice and have an amount that is transferred to that savings account of special occasions like Christmas.
“What you do each month is you make a deposit to this club account, and you can’t withdraw from the account until the end of the year,” Milnes suggested.
While spring cleaning, include on the list of things to do to pay off holiday credit card debt. Take a little time learn about credit cards and debt from these MoneyGeek sources:
- Understanding the Main Types of Debt and How to Pay Them Off
- Guide To Debt Reduction: 5 Options For Resolving Debt
- Managing Your Money: Strategies to Consolidate Multiple Debts
“You need to make a plan to pay off that credit card debt as quickly as possible,” Milnes said.
If someone needs help paying off debts and building their credit score, Doug Milnes suggests reaching out to the National Foundation for Credit Counseling and Money Management International. Both non-profits have a long history and a great record of helping those who are struggling to make ends meet.
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