If holiday seasons of the past are any indicator of what to expect this holiday season, millions of dollars will be charged to credit cards during the 2006 holiday season. The reality is that it is pretty easy to pull out that credit card and say “charge it!” But, it’s not quite so easy when it comes to paying off that credit card bill once all the festivities are over
So, what advice can help you save yourself from added stress when it comes time to pay off those bills? First of all, pay of all of your card balances immediately before incurring any finance charges, if at all possible. This is the “Golden Rule” of credit card use. If you can stay disciplined in this regard, you can avoid many credit card pitfalls. If paying down the balance simply isn’t possible (which is a different subject entirely), make sure you arrange to pay off those card balances as aggressively as possible. Think of it this way … if the APR on your credit card is 14%, each dollar that you pay down on that card balance will be earning you a very healthy return on investment (otherwise known as ROI) of 14%. That’s a healthy rate of return for ANY investment. So try to look at paying down your card balances as an investment with a solid ROI.
Above all else, be absolutely sure to make your card payment on time, whatever it is. Paying your credit card late can cause an increase in your interest rate, which will cost you extra bucks in the future and will certainly have you singing the post-holiday blues.
Luckily, the Federal Reserve hasn’t been hiking up those interest rates lately either – a welcome change after the last two years when rates were steadily climbing. Many economists believe the rates might actually be on the decline in 2007 – with most economists believing it will be down a quarter point by June of next year.
But don’t get too excited about declining interest rates. Plan out a holiday spending budget, stick to it, and get those cards paid down quickly so you can start the new year off on the right foot.
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