Digging out of holiday debt
NEW YORK (WABC) -- It's the big dig. But we're not talking snow. No, this is post holiday debt deluge. According to MagnifyMoney we were more generous than ever with our holiday spending, charging up an average of $1,054. That's up 5 percent year to year. Here's some tips to cut your debt down to size.
If you're tackling more than a few credit cards, consider the "snowball method." That's where you pay the cards with the smallest balances first. The idea is to build momentum - like a snowball - when you start feeling good about your progress.
The second method is to pay off the balances from cards with the highest interest rates, first. This technique will save you the most on interest payments.
Next, consider a debt consolidation loan or even a balance transfer to another credit card that has a much lower or even zero percent interest teaser rates. Just watch out for hidden fees and pitfalls (like if you're late on a payment could cause your low rate to shoot up.)
Lastly, start paying in cash. Put away or even cut up your credit cards. Stop charging and spending. It's time for you to stop adding to the mountain of debt.
Remember, if you do nothing and pay off just the minimum on your $1054 holiday debt, if you have an APR of 15.9 percent, it will take you more than five years (and an additional $500 in interest) to pay it off.
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