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Tackling Holiday Debt
Strategies for paying off last year's holiday credit card debt, including balance transfers, debt consolidation, debt management plans, and the debt snowball/avalanche methods.
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United States
LifestyleFinanceDebtHolidaysBudgetingCredit
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- Explain the difference between the debt snowball and debt avalanche methods.
- The debt snowball method prioritizes paying off the smallest debts first for psychological motivation, while the debt avalanche method targets the highest-interest debts first for maximum financial savings. Both methods involve maintaining minimum payments on all other debts.
- What are debt management plans, and what benefits and drawbacks do they offer?
- Debt management plans, offered by credit counseling agencies, consolidate debts into a single monthly payment and negotiate lower interest rates or waived fees with creditors. While involving a small monthly fee, significant interest savings are possible.
- How can a debt consolidation loan help manage holiday debt, and what are its advantages?
- Debt consolidation loans combine multiple credit card balances into a single loan with a lower interest rate, saving money and reducing the repayment timeline. The stable rate offers peace of mind compared to variable credit card rates.
- What is one effective way to tackle holiday credit card debt, and what are its potential drawbacks?
- Balance transfer credit cards offering 0% APR introductory periods can help pay down debt without accruing additional interest. However, these often require good credit and involve fees; it's crucial to create a repayment plan to clear the balance before the promotional period ends.
- What is the expected average holiday spending per shopper this year, and how does it compare to previous years?
- The average holiday spending is expected to increase to \$1,638 per shopper this year, a 7% increase from 2023 and 15% from 2022. This increase, coupled with high credit card interest rates, can lead to increased financial strain for many.