How to manage credit card debt while Christmas shopping

And, he advised, add savings to your “spending list” and put some cash aside. So you have reserves when the vacation bills are due.

Here are some questions and answers on how to deal with holiday expenses and debt:

It’s especially important to keep card spending in check as interest rates rise, meaning carrying balances from one month to the next becomes more expensive. According to Bankrate, the average credit card rate is over 19 percent, up from about 16 percent earlier this year.

Buy now, pay later Services like Afterpay, Affirm and Klarna are becoming increasingly popular. More than a quarter of Americans have used them, and most are happy with them, according to a new Consumer Reports poll. The short-term loans, usually offered online at the point of sale, allow borrowers to prepay part of the purchase and pay the balance in multiple fixed payments.

But there is reason to be careful when using the services. Users may not think of it as a form of credit, but Ms Ellis said: “It’s still debt.” The credit is easy to get, so people might take out several – and then have trouble juggling them. Consumer reports found that people who had four or more loans at once were twice as likely to miss payments than those with fewer loans. The survey also found that 10 percent of people who used these services said they had trouble getting refunds or stopping payments for items they never received.

If you cannot pay your remaining balance in full, you will pay more than the required minimum payment. Otherwise, you’ll take longer to pay off your debt and pay a lot more interest. “Do you have a rule of thumb,” Mr. Wright said, such as B. Paying $10 more than the minimum or twice the minimum.

A series of studies by researchers at institutions like Ohio State University found that people who could choose to pay back certain purchases — like coffee at Starbucks or an electric bill — paid more to reduce their debt. The technique increased awareness of what was being paid back, leading to perceptions of greater advances in debt reduction, according to a report on the experiments.

Grant Donnelly, an assistant professor of marketing at Ohio State who was one of the report’s authors, said some credit cards, including offerings from American Express and Chase, have options for users to select specific purchases that pay for themselves over time should be. However, you can charge a fee for setting up the payment plan.

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