Financial Fitness

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Anyone out there still paying off the Holiday bills? Holiday overspending can be hard to avoid but avoiding the overspending is not the right approach. Here are some ways to help pay off debt:

Plan ahead. Next holiday season, create a budget of how much you can afford to spend. If you aren’t able to save the money each month, consider opening a Holiday Club Account at your local Credit Union or bank.

Consolidate. If you’re juggling various costly debts such as multiple credit cards, consider consolidating your debt with a personal loan. The interest rate to pay back a personal loan will most likely be less than what you’re paying on your credit card, and you will have only one payment to make each month instead of several.

Pay more than the minimum. The longer it takes you to repay the charges, the more interest you’re paying. Pay as much as you can each month. If your credit card balance is high relative to your credit limit, it could cost you in credit score points.

Credit Score. Another way consolidating your debt can help is it allows you to pay down the principle faster; as a result, you may see your credit score increase.

Pay With Cash. Until you are able to pay down your credit card get into the habit of using cash. You don’t have to actually carry cash with you, use your credit/debit card from your Credit Union or bank where the money will come directly out of your checking account. If you don’t have money, you will have to think twice about whether you really need to make a purchase.

Spending Habits. What you absolutely should not do is consolidate your credit card debt and continue with poor spending habits. Don’t let bad spending habits turn into a continuous struggle to pay back credit card debt.

Credit Card Calculator. To find out how long it will take you to pay off your credit card, there are many credit card calculator’s available online. A good one is available at http://www.bankrate.com/calculators/credit-cards/credit-card-payoff-calc... Enter your credit card balance, interest rate and the payment amount per month, and the calculator will tell you how many months it will take you to pay off your credit card.

This information is provided by Oxford Federal Credit Union as general information, and is not intended as financial advice. If you have a financial question you would like answered email it to marketer@ofcu.org.