ROANOKE, Va. (WFXR) – Many people find themselves entering 2023 with lots of holiday debt. According to a recent survey by Lending Tree, Americans took on an average debt of over $1,500 during the holiday season, up 24 percent compared to 2021’s holiday season. Now, borrowers are looking to pay back that debt quickly.
Nathan Grant, a finance industry analyst for MoneyTips, said, “Paying interest on whether it’s holiday debt or any debt is kind of like throwing money away. So paying down that high-interest debt earlier in the year is going to help you succeed going forward into 2023.”
Grant said one way people can free up more money in their budgets is by canceling unnecessary subscriptions.
“We’re all guilty of it. You forget you’ve signed up for that service and your shows are over with and you’re not really using it right now. Look at everything you’re putting your money into every month and if you can cut back on a few of those and free up some extra money that can go towards paying off your debt faster,” said Grant.
Another way borrowers can begin paying off debt faster is by cutting back on delivery apps. Grant said, “A lot of times you’re astounded by how much more [the product] actually is. Maybe cutback at least in the beginning of the year as you’re trying to pay off some of your holiday debt.”
The financial expert said people can also contact their credit card company and ask their due date be shifted if the current due date falls around the same time as mortgage, rent, or car payments.
Grant said, “You might be just paying the minimum. And one thing with credit card debt is that if you’re only paying the minimum every month it’s going to feel like you’re never catching up, you’re never getting ahead. You want to pay as much as possible so you can get that paid off and over time save money on the interest on that debt.”
Some borrowers are considering consolidating their credit card balances onto one credit card. Grant said this option could simplify the process of paying debt, but you want to be sure you are transferring the balances to a credit card with a low-interest rate. He said, “Even if you can transfer a portion of a high-interest balance to a card with like a zero percent APR for a year or more, that’s a lot more time for you to be able to pay that off without paying the interest on top of it.”
For more strategies to help you get off your debt faster, visit the MoneyTips website.