This article is reprinted by permission from NerdWallet. Entering the holiday season with high-interest debt or financial struggles can put you at risk for a debt hangover that could linger for years.
It’s a crossroads that many will unfortunately encounter this holiday season. Credit card balances rose to over $1 trillion in the second quarter of 2023, according to a report by the Federal Reserve Bank of New York. The average rate for credit cards assessed interest as of August 2023 was 22.77%, according to data by the Federal Reserve. Compared with previous years, that rate is alarmingly high. With interest rates sky-high, this is one of the worst times to charge expenses to credit cards that you can’t pay off quickly. Before you shop for the holidays, consider these ways to help you get clear on your goals and protect your finances. Plus: 7 more ways to save that you may not have considered1. Find a way to lower high-interest debt If you’re already carrying debt, consider ways to save money on interest. Depending on your credit, some options may include:
A 0% introductory APR balance transfer credit card: This card lets you move debt onto it from a different account to get the lower interest rate. The ideal card has no annual fee and a balance transfer fee of 3% or lower. Compare the cost of the fee with the projected interest payments on your current card to determine if it’s worth paying. (Read: 7 mistakes you don’t want to make with a balance transfer credit card)
A personal loan: For multiple debt balances, a personal loan that consolidates debts into a single low-interest fixed payment can simplify your finances.
A debt management plan: If you’re struggling to keep up with bills, a coun …