Pay Off Holiday Debt With Six Steps

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Bills.com tips help consumers end borrowing, eliminate debt

As consumers become accustomed to writing "2007" on their checks, many of those payments will be aimed at alarming credit card bills that remind borrowers, in painful detail, exactly how much their holiday generosity cost, said Brad Stroh, co-founder and co-CEO of consumer financial portal Bills.com.

"In 2006, the average consumer anticipated spending over $900 on the holidays," Stroh said. "Most likely, those spending more used plastic to put off paying for their gifts. If they aren't careful, they'll still be paying on that holiday debt when this year's shopping season begins."

To help consumers pay off holiday debt, Stroh suggested the following tips to eliminate credit card bills.

1.    Charge no more. First and foremost, Stroh said, stop using credit cards. Take cards out of your wallet, if necessary. "If you can't pay for it now, don't buy it."

2.    Pay on time. Send payments on time, even if it is only the minimum amount due. Stroh pointed out that paying bills late can have significant consequences, including late fees that add to the mountain of debt, and "penalty" interest rates of up to 31 percent, which result in higher minimum payment amounts. Some cards can even raise borrowers' interest rates in response to a late payment on another creditor's account.

3.    Pay more. Pay more than the minimum payment when possible. Adding even $10 or $20 to the payment -- or rounding payments up to the next $10 or $100 increment -- will knock out debt faster. "Another option is to take advantage of New Year clean-out or spring-cleaning moods," Stroh suggested. "Sell unneeded possessions and funnel the proceeds directly to your credit-card bills."

4.    Eliminate high rates first. Pay the most on the highest-rate debt. When that's paid off, move to the next-highest-rate debt. Remember that this applies only to credit card (unsecured) debts. Always pay secured debts (mortgage, car) first.

5.    Negotiate rates. "If you always pay on time and simply have accumulated more debt than usual, you might be your creditor's ideal customer," noted Stroh. If your interest rate is above the national average of 14.67 percent, call your card's customer service line and ask if they can give you a better rate.

6.    Seek help. Consumers have many sources of help to get out of debt, especially if the situation was caused by a short-term problem such as a medical emergency. Options - depending on individual circumstance - can include borrowing from relatives, borrowing against life insurance or retirement funds, or consolidating old debt onto a no-interest credit card. For more ideas, see http://www.bills.com/debtconsolidationarticle1/.

"The holidays are about giving," Stroh added. "Now, after the holidays, give yourself the gift of eliminating debt. By paying off lingering holiday expenses now, you can prevent temporary hardships from becoming permanent financial crises."

Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and save money by choosing the best-value products and services. Since 2002, Bills.com and its partner company, Freedom Financial Network, have served more than 10,000 customers nationwide while managing more than $350 million in consumer debt. The company's co-founders and CEOs, Andrew Housser and Brad Stroh, were named Northern California finalists in Ernst & Young's 2006 Entrepreneur of the Year Awards.

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Aimee Bennett
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