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How to Deal with your Christmas Debts

As we head towards the end of January, the dust from Christmas has now settled and we’re all more or less back to normal.  However, with figures showing that more than 40% of parents went into debt over Christmas, some of us may struggle for quite some time to recover from overspending during the Christmas period.  Apparently, the average household blew more than £800 on Christmas and, while that might seem like a fairly modest amount to some, it represents a lot of money to households struggling to make ends meet on a monthly basis.  Debts can spiral out of control quite easily, especially payday loans or expensive credit card payments.  The interest on the debt mounts relentlessly and you could find yourself spending most of the next year paying for Christmas in some way or another!  Here are some tips that you can use to deal with your post-Christmas debts.

·         Face it head on – don’t feel too scared to look at your bank balance, dealing with the facts is the only way you’re going to take control of your finances.  Make a list of everything that you know (including any Christmas bills on your credit card) so that you know exactly where you stand starting off.

·         Check the charges – if your bank balance is low or you’re struggling to pay a credit card bill your debts can quickly get out of control.  An unauthorised overdraft will result in more charges over a 15 day period and any bounced direct debits or cheques will incur more fees.  If you’re finding it difficult to pay your credit card bill in full you have the option of making a minimum payment.  However, a card with a high APR (annual purchase rate) can lead to more charges that will leave you facing mounting debts.

·         Stop – the debt from mounting with an authorised overdraft.  Some banks will offer an interest-free short term overdraft that could help you bring your finances back under control.  Transferring your credit card debt to an interest free or low interest credit card is another way of buying yourself some time.  Always try to pay back the money by the end of any interest-free term.

·         Consider your options – if you’re unable to obtain an authorised overdraft or a balance transfer card there are some better options for you than pay day loans.  There are reputable charities that will help you draw up a debt management plan which could result in you paying off your debt at a much more affordable rate.  There are free providers of debt management plans who will advise you and help you set up a realistic budget before approaching your creditors.

·         Start afresh – once you’ve set up a plan to manage your debt, start to plan for a debt-free future.  Overspending will always leave you feeling financially insecure.  Look for places where you can start to make some real savings such as switching energy, TV and broadband providers to get a better deal (check that you won’t have to pay an exit penalty before making the switch).