Credit card debt is one of those things that can slowly creep up over time. This is especially true when you have the habit of paying off the minimum monthly amount. The outstanding debt eventually builds up due to the interest rates of your credit card balance. Here are some staggering facts about credit card debt:
- 56% of people who have credit card debt have been carrying the balance for over a year.
- One out of three card holders have debt in more than one card.
- Millennials are more likely to have credit card debt.
- Lower-income individuals have higher debt, while high-income individuals have long-term debt.
It seems like credit card debt is slowly turning into a fact of life. However, this should not be the status quo. According to Wink Capital, a well-known financial planning and debt assistance company, holiday credit card debt is considered one of the most overlooked types of liabilities.
Since many people frequently go on holidays, debt always seem to appear and go unpaid. In this post, we will further understand why holiday credit card debt should be dealt with immediately.
Wink Capital Explains Why You Need to Make a Plan to Deal With Holiday Credit Card Debt Now
Credit cards change interest rates over time.
Credit card companies do not have an interest rate that stays stagnant for the long-term. In fact, credit card interest rates can soar as high as 18% under their Annual Percentage. If you want to pay off your holiday credit card debt quickly, you need to chance upon lower interest rates and complete your payment before percentages soar.
Paying off credit card debt slowly does not improve credit scores.
If you’re thinking that paying off holiday credit card debt long-term will help financing companies consider your future plans to loan, think again. According to Wink Capital, this strategy may even harm your chances of getting a good credit score.
The only factors that matter when it comes to paying off credit card debt would be the following:
- Paying off your debt on time: Every month, it is essential to pay your debt before the due date. Missing your payment time frequently hurts your credit score.
- Percentage of use: Another factor would be how much of your credit limit you are using. Ideally, you would want to use 30% or below of your credit limit to ensure a good credit score.
Paying the minimum balance becomes a bad habit.
Lastly, one of the main reasons why it is recommended to pay off credit card debt right away is because of the habit it builds. Some people are stuck in debt because they refuse to pay the full balance, but would rather stretch it using the minimum amount.
Not only is this building up more debt through interest rates, it also becomes a habit that forms over time. Soon, you may find yourself using multiple credit cards to pay off debt until it becomes unmanageable.
Some of the tips to help you pay credit card debt more efficiently are:
- Setting up reminders to pay on or before the due date
- Putting aside a portion of your paycheck for paying off debt even before spending on other things
- Seeking help from debt management companies to help you build a plan on paying holiday credit card debt
With these strategies, you can successfully stay on top of your credit card debt which will lead you to a more financially secure life