All articles tagged with #holiday debt
The article offers six practical steps for Americans to recover from holiday debt, including assessing the damage, pausing discretionary spending, returning unwanted items, choosing a repayment strategy like the snowball or avalanche method, considering debt relief programs, and working with financial professionals to manage and reduce debt effectively.
Many Americans turned to buy now, pay later services to fund their holiday shopping last year, but are now struggling to pay off those bills, leading to concerns about the impact on the economy. The surge in usage of buy now, pay later comes as credit card debt hits a record high and delinquency rates have nearly doubled over the past two years. While some users appreciate the flexibility it offers, others find themselves buried under a mountain of micro payments, prompting worries about how they'll cover their bills.
A personal finance coach is warning about the potential financial pitfalls of Christmas shopping this year, citing inflation and the high levels of holiday debt from last year. The coach advises people to refuse to participate in gift-giving if they are worried about affording it, emphasizing that children don't remember who gave them gifts and that most gifts eventually become garbage. The coach suggests prioritizing experiences over material gifts and encourages investing money instead of spending it on presents.
A quarter of Americans are still carrying holiday debt from 2022, with credit card balances rising to $1.08 trillion in the third quarter of this year. Experts warn that elevated interest rates could extend the time it takes to pay off debt, with it potentially taking 40 months to pay off a $1,000 credit card bill. As Americans continue to grapple with inflation's impact on household budgets, almost a fifth of Americans plan to apply for a new credit card to help pay for holiday shopping this year. Experts advise paying off credit card balances in full to avoid interest and utilizing credit card rewards programs, but caution against taking on more debt just for rewards.
Approximately 25% of Americans are still paying off holiday debt from last year, and with higher interest rates, it's becoming more expensive to pay down credit card debt. To avoid piling on more debt during the holidays, experts suggest making a list and sticking to a budget, utilizing credit card rewards wisely, and communicating with family and friends about budget constraints. It's important to remember that the season of giving doesn't have to mean spending a lot of money.