As online shopping hit record highs this past holiday season, so did consumer debt. According to a recent survey from MagnifyMoney, Americans racked up record amounts of credit card debt, with the average consumer borrowing more than $1,300.
And for most, it means hundreds, if not thousands of dollars in interest payments in the new year and beyond. Chartered Financial Consultant John Caserta has some tips on how to tackle that debt.
Caserta says unemployment, furloughs, lack of planning and lack of savings contributed to credit card debt. He suggests these tips to start the process:
- Organize your debt.
- Pay down your debt by thinking about consolidating debt and transferring balances to cards that have 0% for a period of time.
- You can use either the “avalanche” method or the “snowball” method.
- The avalanche method prioritizes paying down the debt with the highest interest rate first.
- The snowball method tackled the smallest balances first.
Caserta says to avoid holiday debt in the future, pick a total amount that you will spend on gifts next year, and save for it throughout the year.