Oh, I know. The holidays? Who's thinking about the holidays in May? The answer may not be you, but you should be. Here's why: The so-called holiday hangover.
What's the holiday hangover? It's the sting that millions of Americans are still feeling, as they receive their credit card statements each month. And when do they spend the most? You guessed it: the holidays. And they spend even more when they charge their gifts instead of paying in cash, getting caught up in the holiday spirit. It's a habit you want to definitely want to avoid. And with 116 million Economic Stimulus checks en route or already delivered, nipping the holiday hangover in the bud has never been easier.
According to the public policy firm, Demos, more than $2.2 trillion dollars was put on U.S. credit cards last year in purchases and cash advances. The companies handling those transactions charged $18.1 billion in late fees to their customers (R.K. Hammer). And that was before the present credit crunch. Currently, credit card default is up 30% - highest rate since 1992. However, as these big financial services companies have no intention of taking it on the chin, they have made the decision to raise their rates. The headline in a recent ‘USA Today' article was "Credit Card rates hustle higher." [http://www.usatoday.com/money/perfi/credit/2008-04-27-credit-card-fees_N.htm]. According to the article, Washington Mutual told its customers that it was raising its rates by as much as 100%. Discover is raising its penalty rate to 31%. Bank of America has tripled its rates for some of its customers. Who is suffering? Often times it is folks who not only pay on time but have had no change in their credit history.
Just think. You put a couple thousand bucks on your plastic next December for gifts for family and friends. Then, you get stuck and can only make the minimum monthly payment. How long will it take to pay that off? About 15 years.
Now, take that Economic Stimulus check and put it to work for you over the next six months, while adding to it a little each month and there won't be any credit card bills come next January. No holiday hangover. No regret. Just a chance – and for many the first time ever – to completely enjoy the holidays while creating memories, not reminders in the form of bills.
So again, are you saving up for the holidays? Reversing the credit card mindset of "buy now, pay later" needs to be your first step and you can start with your Stimulus check, because the idea of saving up before buying something makes more sense than ever. That old saying "Christmas comes but once a year" shouldn't include the stipulation that you'll be paying for it the ensuing eleven months, or, worse, even longer. |
