It was not too long ago when we looked forward to heading to our mailboxes. They were filled with Amazon boxes, Holiday cards from relatives, and Boxing Day blowout flyers.
Now, for many of us, the trudge to the mailbox is filled with more dread than anticipation. The true cost of holiday spending is delivered in black and white in the form of credit card statements.
No need to despair – follow these tips to tackle your holiday debt head on!
1. Compare the Interest Rates
To maximize your debt repayment, concentrate on the highest interest card first. Store-specific cards tend to charge higher interest rates than “regular” cards. Pay these off A.S.A.P. Explore options such as balance transfers, which usually have a very low (albeit temporary) rate of interest, to pay of high interest cards. If at all possible, consolidate all of your debt onto a loan and earn credit rather than destroy credit.
2. Negotiate Your Rate
If you’re a customer in good standing, contact your credit card provider and negotiate a lower interest rate. Explain your needs and let the provider know you’re considering a balance transfer or cancellation of their card due to the high rate. Credit card companies would much rather lower your rate by a few points than lose you completely as a customer.
3. Stop Using Credit
If your credit cards were your first choice as payment for holiday expenses, curb that pattern. Make a conscious effort to avoid new charges whenever possible. Not only will this lessen your overall repayment, tracking your debt repayment is much easier if the balance doesn’t fluctuate.
4. Use Your Tax Refund to Pay Down Your Debt
If you are expecting to receive a tax refund in the spring, why wait until April to file your tax return? NETFILE begins accepting 2018 returns in mid-February. With an average processing time of about 10 days, you could have your refund by the end of February and avoid a month or two of interest charges. Start gathering your slips and info now, make sure you have all of them, and be ready to file when the time comes.
5. Trim your household budget and apply the savings to your debt
A bit of planning makes this one quite easy. For example, if your grocery budget for the week is $125, check out deals, coupons, BOGO’s, and specials before heading to the store. If you can manage to save $25 each week with some smart planning, that’s a cool $100/month to apply to your debt.
6. Don’t Forget the CRA
In the process of paying down debt, it’s even more important to make sure that you keep on top of your tax obligations and file on time, pay as much of the debt as you can (if you owe) and take advantage of incredible products like TurboTax to help you reduce your tax arrears or maximize your refund at tax time.