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Post: Pay Off Your Credit Card Debt Faster With These 3 Year-End Strategies



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Recent consumer research from PYMNTS and Elan Financial Services found that 45% of consumers with credit cards carry balances month over month. While we know that high interest rates can negatively impact your wealth, the holidays are a time where I see learners from my financial education program rack up more debt than they expect.

Here are three simple tips to keep your credit card debt from creeping into the new year.

Focus On The Lowest Credit Card Balance Instead Of Multiple Accounts

Your lowest balance credit card is the first place to look at paying down debt, especially with interest rates currently at around 27%.

My husband and I cleared $300,000 of debt in three years, with many ups and downs and unexpected surprises along the way. There were many times we felt discouraged and were ready to give up and start spending more again.

Instead of trying to pay a little extra toward multiple credit cards, pick the one with the lowest balance, regardless of interest rate. People may argue that the math makes sense to pay the highest interest, but I’ve found that choice can be discouraging if the balance is large.

By putting the minimum payments on all other debts and focusing on the credit card balance with the lowest amount, you will feel a sense of accomplishment that will help you carry on to the next balance. It also helps to have one less account to track as you head into a new year.

Shift Your Priority From Points To Actual Cash Savings

I used to be obsessed with accumulating credit card points just for spending on my regular purchases. Credit card companies’ marketing thrives on the feeling of missing out if you’re not gaining all these seemingly free rewards for flights, hotels and cash back.

But once I decided to ignore my credit card points, I shifted my goal to researching interest-bearing options like high-yield savings accounts and certificates of deposit, which right now are earning over 5% in passive interest in some cases.

I recently showed my financial education students some real-life numbers. In the first four months of 2023, I earned in credit card bonuses. But the amount I accumulated in interest and dividends from focusing on saving and investing resulted in $10,005.27.

These extra dollars in my bank accounts feel like a much more immediate reward than the points I have to accumulate by spending instead of saving money.

Put Your Credit Cards On Ice Until The New Year

If you’re feeling guilty, stress or any other kind of unwelcome feeling, it’s not just you. Roughly 60% of Americans are living paycheck to paycheck going into the holiday season, according to a recent LendingClub report.

Pausing your use of credit cards can be a scary move if you’ve made them your daily habit instead of a debit card. When I temporarily replaced my credit cards with a debit card, I also felt the fear of missing out on points.

But after a month of using only my debit card, it became abundantly clear I was overspending money, because I started to overdraw from my account. Temporarily pausing the use of credit cards shows what your real cash flow looks like, and the changes you need to make in the way you spend become undeniable.

If you find yourself reaching for credit cards while paying off debt in those accounts, you can cut up the physical cards without closing the accounts, and request new ones once your debt is cleared.

Or for a more seasonal theme on pausing your credit card usage, you can literally put them on ice by placing them in your freezer and thawing them out when your debt is down. It may feel like an inconvenience right now, but your future self will thank you for saving hundreds or even thousands of dollars in unnecessary interest payments in the future.

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Lora Helmin

Lora Helmin

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