Already find yourself in over your head with holiday debt? Stressed and anxious as you wonder how you will pay off all those bills? Many people go overboard with holiday spending. In fact, the National Retail Federation (NRF) estimates that consumers will spend approximately 4.5 percent more this year than last year, totaling more than $717.45 billion. That’s a lot of cookie dough!  The NRF said most holiday spending occurs in three main categories. They include gifts; non-gift holiday items, such as food, decorations and greeting cards and other non-gift purchases that take advantage of holiday deals. As we all know, these holiday purchases can really add up.

We hate to sound like Ebenezer Scrooge, but if you haven’t planned early to set aside cash for the holiday season, you may quickly find your budget in ruins. This can also happen if you didn’t bother to track your holiday spending. It’s easy to let those purchases get away from you when you’re using credit cards and not really paying attention to balances. Debt consolidation can help you to combine multiple outstanding debt balances into one account with one monthly payment. The end goal would be to lower your overall interest rate and pay down your debt faster. Read below for some options for consolidating your high-interest holiday debt, as well as tips to get that holiday spending under control while there’s still time.

3 options for consolidating high-interest credit card debt

1.     Take out a personal loan from your local credit union or another lender

Depending on your credit rating, the interest rate on a personal loan can be significantly less than on a high-interest credit card. Lenders typically offer both a personal loan and a personal line of credit. A personal loan could provide you with a lump sum at a fixed interest rate and fixed term to help pay off your holiday debt. A personal line of credit, on the other hand, will enable you to borrow up to a pre-approved amount of money, as you need it during a pre-set draw period. When considering a personal loan to pay down debt, be sure to consider the interest rate and all fees involved in applying for the loan. Click to learn more about Spirit Financial Credit Union’s personal loans and personal lines of credit to see which option might best fit your needs.

2.     Take advantage of a low-interest balance transfer credit card

If you’ve used a high-interest credit card for all of that holiday spending, you can get even deeper in debt paying interest each month as you try to pay down the balance. A balance transfer card will enable you to transfer debt from one or more credit cards to a new credit card. Many balance transfer credit cards offer a zero percent or low-interest rate special for a limited period of time. This may buy you the time you need to pay down your card at that lower interest rate. Keep in mind, after the introductory rate period, the balance will revert to the regular interest rate of the card. Things to look at when considering this option include the length of the introductory balance transfer rate special, the APR after the introductory period ends, and any balance transfer or other fees. Many credit unions, including Spirit Financial, offer an introductory balance transfer rate on credit cards. Learn more about balance transfer credit cards. This can be a great option if you know you can repay the debt during the promotional interest period. Your credit history and credit score will determine if you qualify for a low balance transfer offer.

3.     Borrow against the equity in your home to pay down holiday debt

If you’ve really gotten yourself in a bind this holiday season with spending and possibly some very large unexpected expenses, you may need a larger sum than a personal loan can provide. A home equity loan or home equity line of credit may be a consideration, but there are pros and cons to this option. A pro is the interest rate on a home equity loan is typically much lower than on a credit card, depending on your credit score. You may also be eligible for a larger amount, based on the equity you have built in your home. An important con. You are using your home as collateral, so if you are unable to make your monthly loan payments, you risk losing your home. You need to be sure you can make those payments before considering this option. Any fees or costs involved in applying for a home equity loan should also be factored into your decision.  Learn more about home equity loans and read our Spirit Financial blog “5 Things to Consider Before Applying for a Home Equity Loan.”

If you haven’t started your holiday spending yet, you still have time to control your debt. With a focus on your budget and using our recommendations below, you may be able to ring in the New Year without the typical holiday debt weighing you down.

 Tips to keep avoid holiday debt

·      Earmark a portion of each pay between now and the end of the year for holiday spending. It means tightening your belt in the coming weeks, but it will be worth it to come through the holiday debt free!

·      Sacrifice monthly discretionary spending to divert for holiday spending. Commit to giving up some of those luxuries, so you can afford holiday gifts and other holiday expenses. Here are a few easy ways to save. Use a travel mug to take a coffee from home in the morning rather than buying one on the way to work. Pack your lunch for the next few weeks. Cook more meals at home and eliminate the high cost of dining out. Leftovers will make great packed lunches, so it’s an added bonus. Cut down on entertainment costs. Instead of going to the movies, have a movie night at home with streaming movies and microwave popcorn. Give up that expensive holiday getaway this year. You might find a relaxing holiday spent at home to be a welcome and refreshing change.

·      Avoid last minute shopping. If you wait until the last minute, you’re more apt to make expensive impulse purchases. Plan in advance, taking advantage of sales, coupons and other deals to get the biggest bang for your buck this holiday season.

·      Most importantly, track your holiday spending closely and stick to a budget you can afford. It’s easy with an expense-tracking app, such as Mint.  Mint is the free money management tool that helps you track your spending and more. 

We hope our tips will help you to create a plan to avoid getting into debt or be helpful in providing possible options for paying off your debt. We want you to relax and enjoy a stress-free holiday! Follow Spirit Financial Credit Union on Facebook & Instagram for more helpful tips like these.