How to pay down your Christmas credit card debt before Santa slips down the chimney again

At Christmas, there always seems to be some reason to spend: cocktails after work, new outfit for a party, all the gifts for family and friends, food and drinks for the big feast, and the trip away over New Year to recover from the excesses of Christmas. Unfortunately, a lot of Australians know all too well how easy it is to get carried away at that very merry time of year and are still paying for it months later.

“While we may have enjoyed ourselves last Christmas, chances are our credit card bill may not bring quite so much cheer now that it is March. It’s not very festive to admit, but Christmas is expensive. And, even if we’re sensible with money throughout the 11 other months of the year, there’s something about Christmas that makes us say, bugger it, just spend,” CreditCard.com.au spokesperson, Tess Sanders Lazarus said.

“Unless you have been diligent with your saving, it’s likely much of this spending has ended up on your credit card – often cursing your past-self for saying you will ‘deal with it in the new year’. But what happens now? You have a pile of debt to deal with, and accumulating interest day by day as you figure out how to deal with all that overspending you made excuses for throughout December.”

According to Sanders Lazarus, there are a number of ways you can manage your finances and pay down your Christmas credit card debt sooner.

Balance Transfers

“While there are many plans of attack for busting Christmas credit card debt, you may want to look into applying for a balance transfer card. Offering a period of low or no interest on transferred balances, balance transfer cards could help you pay down that credit card debt faster while saving big on interest,” Sanders Lazarus explained.

According to Sanders Lazarus, balance transfers allow you to transfer a balance from another credit card onto a new credit card to enjoy zero interest or a much lower rate on that balance for an introductory period. This allows you to save on interest and pay off your debt faster.

“It’s no secret, credit card providers make money off the interest they charge. Credit card interest varies according to the card, with basic cards generally charging less in interest, and premium cards with high-end features charging more in interest,” Sanders Lazarus added.

“If you’re carrying your Christmas balance, then you are more than likely paying interest on it. Even with a low rate credit card, carrying a balance can get expensive. If your Christmas credit card debt is making your eyes water, it may not be the best idea to leave it sitting there on an interest accumulating credit card, especially if you are only paying the minimum repayment each month. By transferring it to a balance transfer card, you could save heaps in interest, which has the knock-on effect of allowing you to pay down your debt faster.”

Budgeting

“Budgets tend to go out the window as December rolls in and the silly season takes hold. If you want to get back on track and pay down the Christmas debt sooner, that starts with a good budget,” Sanders Lazarus said.

“When you create a budget, take note of all your regular incomings and outgoings, as well as any incidentals you might need to cover. This should help you work out how much money you have left over to cover the cost of Christmas. If needed, it will also allow you to see where you can cut back to free up some additional cash to slash the debt even faster.”

According to Sander Lazarus, using a budgeting app can be incredibly helpful when setting a budget. Creating a budget manually can be hard work, and it can be easy to miss outgoings when life gets busy. Do some research to find a secure budgeting app that will work best for you if your banking or credit card app doesn’t offer budgeting functionality.

Don’t forget bills or repayments

“While missing a payment isn’t the end of the world, you may need to pay a late fee, and you’re likely to feel a bit silly. If you let a payment slip for more than six weeks, it becomes a default, which will be recorded on your credit file for up to five years. This can make it more difficult to get approved for credit when you apply later on down the line, and puts you back even further from reaching your goal of clearing your Christmas debt,” Sanders Lazarus emphasised.

Get a better credit card

According to Sanders Lazarus, not all credit cards are created equal. Finding the right credit card is something of an art form – something that CreditCard.com.au is here to help you with. Think about how much you are currently paying in fees and interest, as well as what you’re getting in return. If your credit card doesn’t satisfy your needs, it could be time to switch it up for a newer model.

Consolidate your debt

“If you have a number of credit cards covering your Christmas debt, that also means you have a number of bills and monthly due dates. For some people, having numerous debts can be overwhelming and make it difficult to carefully manage your repayments. You can consolidate your card debt so you only have one bill and repayment to worry about,” Sanders Lazarus emphasised.

“It will still be the same amount to pay off overall, but with a balance transfer offer specifically, you should be paying less in interest on that overall bill. That means you can concentrate on clearing your total Christmas balance, and paying it off before the introductory period ends.”

Creditcard.com.au is a website which allows Australians to compare the best deals on credit cards so they can find the one that best suits their needs. Using CreditCard.com.au, you can easily compare a wide range of zero percent purchase offers. Their comparison tool makes this especially easy.

www.creditcard.com.au