How to Defeat Post-Holiday Credit Card Debt

Many Canadians have added to their credit card debt due to a generous bout of holiday shopping for their friends and family. They have overspent and know what is in store when their statement arrives in January. According to experts, the way to defeat post-holiday credit card debt is to curb impulse spending, pay cash, and let the credit card chill.

To reduce your debt load, you may want to return some unused purchases. If your eyes got bigger than what was in your wallet, you may go ahead and do this rather than leave unused purchases lying in the closet only to throw them away later on. Rather than this, return them to the store/ mall and get the money on your credit card. If you paid cash, but you wouldn’t be reading this if you did, you can use the refund to repay a portion of your card debt (About.com).

This, by itself, is not enough to deal with debt. When the holiday season is over, it is important to avoid using credit cards because most probably, they are still warm from holiday shopping, explains ABC Life Literacy Canada’s program director Mack Rogers. The first thing to do is make efforts to create a cash economy at home. Rather than using your Visa or Interac card to make purchases, use cash.

Solutions Credit Counselling Service’s president Margaret Johnson notes that if a person has piled between $2,000 and $3,000 in credit card debt, they can pay it in a couple of months by saving $500 a month (The Spec).  While a balance of $3,000 does not look like much, interest expenses should be factored in. Debt will cost you about $450 at an annual interest rate of 15 percent.

Rather than trying to defeat post-holiday credit card debt (next season), it is a good idea to plan ahead. Look at how much you spent this year and divide this amount by twelve months. This will give you an idea how much you should save a month so that you can be debt-free next January (Wise Bread).

There is a good reason to start saving now. President of British Columbia’s Credit Counselling Society Scott Hannah explains that once the holiday period is over, debt counselors witness a pike in debtors seeking to deal with debts. But personal debt is a tricky trap, and debt creeps up over time. In most cases, it cannot be flushed out without much effort. It is the same with losing weight. Many people want to lose weight quickly, but it does not happen this way, Hannah explains. It takes a person a couple of years to get into debt and about the same period of time to become debt-free.  That said, it is not only post-holiday debt that is a source of concern. It is important to find where money goes on a monthly basis as to have a good idea of your level of spending, Hannah concludes (Huffington Post).