The holidays are one of the easiest times in the year for your debt problems to get out of control. you overspend on gifts, you buy too many new decorations, and you buy things on credit that you can't really afford. As the overspending frenzy is happening, you convince yourself it is okay and that you can deal with any debt problems later. now that the holidays are over, the time to deal with your holiday debt has arrived.
Did you know approximately 5% of Americans at the holidays each year are still paying off debt from the previous year? if you let your debts go and simply make your minimum payments, there's a fair chance you're hardly paying down your debt at all. if you have high balances on credit cards that carry high interest rates, minimum payments often only cover the interest that accrues each month. the principal debt (whatever you paid on your credit card originally) sits at the bottom of your debt pile and never actually gets paid off.
Even worse, if your credit card bills come in but you are unable to pay-forcing you to pay late or not at all-creditors can apply additional fees or even a penalty APR (Annual Percentage Rates). Penalty rates are typically much higher than the interest rate you regularly pay. if penalty APR takes effect then you end up building interest faster, making your debt problems even worse. a penalty APR can be as high as 30% in some cases.
This is the bad debt cycle many people get in from holiday overspending. a few months into the year, debt issues become full blown debt problems and monthly obligations seem insurmountable. That's why it is essential to address you holiday debts as soon as possible so you don't get into a bind simply because you overspent to have a happy holiday. Explore debt relief options as soon as possible before you debt really becomes an issue that causes you to lose sleep this year.
The easiest way to determine which debt solution can fix your holiday debt problems is to contact a certified credit counseling agency. Qualified credit counselors are trained to assess your financial situation and offer education on the debt relief options available to you. Often the solution is enrolling in a debt management program that consolidates debts into one low monthly payment to make your debt easier to handle from month to month. Credit counseling agencies administer debt management programs, so your credit counselor can set you up in the right program then if you decide that's the option you want to take.
There are other options like debt consolidation loans, but you need to have a strong credit score to get the most out of a loan option, because you have to qualify for a good interest rate. you can check your credit score or discuss consolidation loans with your credit counselor to see if that's a viable solution. Whatever you decide to do address your holiday debts as soon as possible so you're not still paying for last year's gifts when the holidays come back around this year.
Why the New Year Is the Time to Find Holiday Debt Relief
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