The Best Way to Pay Off Those Christmas Bills

As the year winds down, the first of all those Christmas bills has undoubtedly already arrived in your mailbox, and if you’re anything like the rest of us, the bill is more than you expected. And it will take longer than you thought to pay it off, too. I don’t know about you, but I hate starting off the new year with last year’s bills hanging over my head, knowing that the interest alone will keep me from paying it off anytime soon. That’s why one of the first things I do after the holidays is to take a long, hard look at my credit card bills.

How much did I charge this year? What’s the interest rate on the credit cards with balances? What fees do those credit cards charge? How long will it take me to pay the credit card balances off if I only make the minimum payments? What impact will the bills have on my monthly budget? And if I’m not happy with the answers to those questions? Then I look for options.

What are your options? You could get a personal loan to consolidate all of your credit cards into one lower monthly payment, and if you have a lot of debt, that can be your best option. But a personal loan also has an interest rate attached to it and the term is usually anywhere from two to five years, so you’ll want to take both into consideration when figuring out how to pay off your debt. The other option that you have is one that I personally like to use when I’ve got a couple of credit cards that I want to get paid off quickly.

Balance transfer credit cards typically come with an introductory period of 0% interest on either purchases that you make with the card or on balances that you transfer from other credit cards. This introductory period can last anywhere from a few months to almost two years. That means you won’t pay any interest if you pay the card off within that introductory period! That’s right, NO INTEREST. That can really save a lot of money AND you may even have extra in your monthly budget. Just make sure that you plan your payments so that the balance transfer is paid off before the introductory period expires!

Where do you start? Why not start with one of these offers:

Balance Transfers Can Save You Lots of Money

As the year draws to a close, many people take a long, hard look at their finances, looking for ways to save money on anything and everything.  Personally, I like to take a look at my credit card balances because that’s one of the best places to find savings.  If you can cut out just a fraction of the monthly interest on any one credit card, you can save money, but what if you could cut out all of the interest on all of your credit cards?   How much would those savings amount to?

If you’ve got good credit, cutting out all of the interest on one or more of your credit cards is actually fairly easy if you transfer the balances to a new credit card with a balance transfer incentive.  Right now, many credit card companies are offering up to 18 months interest free with balance transfers, and that gives you the opportunity to lower your monthly payments AND pay off the balance if you plan your monthly payments to coincide with the expiration of the interest free period.

Does a balance transfer card make sense for you?  Truthfully, a balance transfer card makes sense for most people.  After all, who wouldn’t want to save money on credit card interest over the course of the next year or so?

Not sure how much you could save?  Check out these balance transfer options:

It’s October!

Well, it’s October, and you know what that means? Yes, your mailbox is likely filled with all sorts of offers… credit cards with no interest, catalogs with pre-approved lines of credit, and personal loan offers! Some of them look pretty tempting, don’t they? But, should you fill any of them out and return them? Should you complete the application online? Should you even consider the offers at all?

Honestly, yes and no to all of these questions. While the offers are definitely worth considering, you also need to do your research before applying for ANY credit card, catalog card, or personal loan.

First and foremost, check your credit score! Most of the mailers that you receive are based on the demographics of your state, city, town, or even your specific neighborhood, and not necessarily on your specific credit profile, so checking your credit first gives you the basic information that you need to start with before you even consider a single offer. If the offer is for a credit score that’s much higher than yours, you are likely to be rejected, which definitely hurts your credit score. And if the offer is for a credit score that’s much lower than yours, you will most certainly pay a higher interest rate, additional fees, and lose out on the perks that come with a credit card for better credit. So, start with your credit score.

Once you have your credit score in hand, you’re ready to move on to the next step. Consider each offer carefully! Remember, these are bulk rate mailers, and they’re not necessarily tailored to your specific needs, so what looks good at first may not compare to other options that you most likely have with other credit card, catalog, or personal loan vendors.

The best place to start is the individual credit vendor’s website. Are they legitimate? Are the terms that you see in your offer the same as you find online? Are they typically for individuals with credit scores in the same range as your credit score? Remember, these days, everything and anything is fair game to scammers out there trying to steal your money, your identity, or worse, and as such, you must consider everything and anything as suspect.

Once you’ve determined that the offer is legitimate, then it’s time to compare the offer in your hands to other offers that are out there. Are you getting the best interest rate? Are you getting the best rewards? Would you be paying fees? Is there a better option for you?

Unless you do the research, you can and you will lose out on the best credit card offers, and that will most certainly cost you more in the long run. So, do the research first, and then enjoy the benefits of those credit offers!

Here’s a good place to start:

It’s Prime Time to Review Your Interest Rates

On Wednesday, Dec. 14, 2016, the prime rate increased as a result of the Federal Reserve Open Market Committee actions. The prime rate is the rate banks typically charge their most credit worthy customers, and is used to determine rates on consumer loan products such as credit cards or auto loans. This means that products with a variable interest rate will see an increase in rates. If you have a fixed rate, the prime rate increase will not impact your existing product.

What does this mean for USAA members? Unless you have a significant amount of variable rate debt, the impact should be minimal. On your January statement, you will see an increase in the amount of interest, which will increase the minimum payment on your USAA credit card. Over the next couple of months, you can also expect to see an increase in fixed rates for any new loans you take out. On a positive note, it is also possible that deposit rates could increase slightly.

How can you decrease the impact of changing interest rates?

  • Pay off credit card balances in full each billing cycle. The interest rate is irrelevant if you never have to pay it.
  • Look for options to consolidate variable rates into a fixed rate. USAA Bank offers fixed rate personal loans. You can use the Personal Loan Calculator and the Debt Consolidator Tool on the page to see if it makes sense for you.
  • Consider consolidating variable rate student loans to a fixed rate. For federal student loans, visit the student aid website to learn more about your options. Before making the decision to consolidate, be sure to consider any loss of benefits from the original loan. For private student loans, contact your lender to discuss options.
  • If you are planning to make a major purchase, such as a vehicle, now may be the time to move. As long as you can afford the payment and other associated costs, such as insurance and gas, then buying before rates increase could save you money.
  • Stick to a budget. Those most impacted by an increase in the prime rate typically carry a significant amount of variable-rate debt. Following a budget can help you avoid overextending yourself and getting into a financial bind.

Rates may be increasing, but they are still far below what we have seen in the past (13% in 1984). Following sound money management principles can help reduce the impact and alleviate the stress associated with increasing rates. USAA is here to help.