Managing Credit Card Debt After the Holidays: How to Prevent a Bad Situation from Getting Worse

Managing Credit Card Debt After the Holidays:  How to Prevent a Bad Situation from Getting Worse

As the holidays approach, household credit card use will increase dramatically as consumers rely on credit for retail purchases, goods, and travel. The good tidings of December do not necessarily have to evolve into the bad tidings of January and February as the bills begin to roll in. But assuming for purposes of this article that you have overspent during the holidays, there are several things to keep in mind as the bills become due so that an unpleasant financial situation does not become a life-changing financial situation.

Try as best as possible to make the minimum monthly payments on all credit cards. Many consumers will neglect the credit cards with the higher balances and try to pay off the credit cards with lower balances one by one. Unfortunately, failure to make the minimum monthly payment by the due date can trigger a higher rate of interest, which means that you will pay more money out over the long run. Also, the default on one credit card could lead to increased interest on other credit cards, even if the payments were timely made on those accounts.

Avoid a consolidation loan unless it has a set interest rate, and you are confident that you can make the monthly payment. However, a consolidation loan will not help you if you resume use of the credit cards once the original balances have been transferred. Also avoid using your house as collateral for such a loan, as a default on the consolidation loan could result in the foreclosure of your residence.

If you have recently checked one of the free credit score websites, you may have inadvertently given your information to companies that offer debt management or debt settlement services. These companies will call you and make unrealistic promises about how they can help you manage or eliminate your credit card debt. These unsolicited calls are much more likely in the first months of the year, when many consumers are struggling with credit card debt. Invariably, such repayment or settlement plans only make matters worse, rather than better.

If you traditionally receive an income tax refund, budget in advance as to how much of that refund will be used to pay any credit card debt that you are still carrying. If at all possible, use as much of your refund money as you can afford to pay off or pay down your credit card debt, especially the accounts that carry the highest interest rates (traditionally retail or gas cards).

Unfortunately, if you have suffered any reduction in income or increase in expenses, these pointers still may not be able to assist you in managing post – holiday debt. In that instance, it would certainly make sense to consult a bankruptcy attorney. This will prevent you from making decisions that may jeopardize your home or automobile. Like most firms in the CSRA, Leiden and Leiden offers a free bankruptcy consultation for consumers who find themselves in financial distress at the beginning of 2018.