Infographic: Ghost of Christmas 2011 Could Haunt the Average American for Four Years

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CreditDonkey.com research infographic illustrates how consumers can manage holiday debt repayment to avoid the ghost of Christmas 2011.

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negative implications of only making minimum bill payments

The average American could be haunted by the ghost of Christmas 2011 for the next four years and pay $195 in interest charges on holiday debt if he or she pays only a minimum monthly credit card payment in 2012, according to an infographic released today by CreditDonkey.com, a credit card comparison Web site.

Infographic: http://www.creditdonkey.com/christmas-ghost.html

“Americans spend quite a bit using credit cards around the holidays,” said Charles Tran, founder of CreditDonkey.com, a credit card comparison website. “But they don’t always recognize the negative implications of only making minimum bill payments.”

The “Jacob Marley Christmas Debt Chart,” developed using data compiled separately by Gallup and the Federal Reserve, is designed as a tool to educate consumers about wise use of credit cards at the holidays. The chart estimates an average American consumer needs to add about $64 a month to his or her regular credit card payment to clear 2011 holiday debt in time for Christmas 2012.

The estimates are surrounded by images and data that put Christmas celebrations in the historical context of Charles Dickens’ Victorian England, the dawn of the industrial revolution when religious, social and consumer traditions became the foundations of the holiday most Americans know today.

Taking data from Gallup’s monthly survey of consumers about their planned holiday spending and applying to that the Federal Reserve’s average credit card interest rate (13.08% APR for accounts assessed interest in Q3 as of December 7, 2011), the chart creates a prototypical American consumer and projects how long it would take him or her to clear holiday debt by making minimum credit card payments. For comparison, the chart also calculates an alternative monthly payment sufficient to clear the same debt in 12 months.

While few people today plan far enough ahead to put a monthly deposit in a segregated, interest-bearing Christmas Club account, consumers still can strategically amortize the cost of Christmas 2011 across 12 months and minimize the interest they pay. The Jacob Marley Christmas Debt Chart shows young consumers how to develop and manage their own rolling Christmas Club using credit.

“A strong fourth quarter is always good for the American economy, but it’s never good when consumers come out of the holidays loaded down with unmanaged debt,” said Tran. “We’re suggesting people pick up some of the old habits of discipline and apply them to convenient new credit tools to participate more productively in a healthier economy.”

CreditDonkey.com is a credit card comparison site designed to help consumers evaluate the growing number of credit options and by offering tips and tools to make informed, responsible, and empowered decisions about credit.

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Charles Tran
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