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How to Manage Credit Card Debt While Holiday Shopping

by SuperiorInvest

And, he advised, put savings on your “spending” list and put some cash away. That way, you’ll have some reserves for when the vacation bills come due.

Here are some questions and answers about managing vacation expenses and debt:

Keeping up with your card spending is especially important as interest rates rise, meaning it will cost more to carry balances from one month to the next. The average credit card rate is 19 percent, up from about 16 percent earlier this year Bankruptcy.

Buy now, pay later services, including Afterpay, Affirm and Klarna, are becoming increasingly popular. More than a quarter of Americans have used them, and most are satisfied with them, according to a new survey from Consumer News. Short-term loans, which are usually offered online at the point of sale, allow borrowers to pay for part of the purchase up front and pay the balance in several fixed payments.

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

If you can’t pay the balance in full, pay more than the minimum required payment. Otherwise, it will take you longer to get out of debt and you will pay a lot more in interest. “Have a rule of thumb,” Mr. Wright said, as if they were paying $10 more than the minimum or double the minimum.

A series of studies by researchers at institutions including The Ohio State University found that people who could choose specific purchases to pay off — like a Starbucks coffee or a utility bill — paid more to reduce their debt. This technique increased awareness of what was being repaid, leading to a perception of greater progress towards debt reduction, message on experiments he said.

Grant Donnelly, an assistant professor of marketing at Ohio State who co-authored the report, said some credit cards, including those offered by American Express and Chase, allow users to choose specific purchases that will pay off over time. However, they may charge a fee to set up a payment plan.

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