Approximately 28 percent of shoppers swipe plastic on Black Friday or make digital purchases while carrying credit card debt from last season. Given the average American struggles with an inordinate amount of credit card debt after the holidays, 2025 calls for a New Year’s resolution. One of the best ways to save money on gift purchases involves moving balances to lower-interest accounts that don’t charge transfer fees.
A combination of inflation and generosity is expected to increase gift and other holiday expenses by 8 percent in 2024. Consumers are expected to spend an average of $1,778. Nearly three-quarters of that money will entail credit cards, according to the 39th annual 2024 Deloitte Holiday Retail Survey.
It’s essential to keep in mind that excessive holiday shopping can have a debilitating impact on your financial situation. High balances and maxed-out cards negatively impact your debt-to-income ratio and borrowing bandwidth. As balances creep up and income stays static, your FICO typically drops. Declining credit scores reduce access to low-interest borrowing opportunities and favorable repayment terms. That’s why it’s advisable to avoid spending more than you can pay back quickly.
Although we all take a different approach to holiday spending, there are common overspending habits that trip up working families. The first revolves around not establishing firm spending limits. People tend to have only a loose idea about how much they can afford to spend. Without a written budget, impulse purchases turn into credit card debt that takes months to pay off. Other pitfalls include dining out more often during the busy holidays, social media influences, and stress-driven purchases. Once the gift-giving dust settles and you see what you owe, balance transfers offer a long-term solution.
Credit card debt with fees generally defeats the purpose. Fortunately, the best local lenders offer programs with reasonably low interest rates and zero balance transfer fees.
Transferring a credit card balance to another account is fairly straightforward. Review the interest rates between the cards to move balances from high-interest accounts to lower ones. Sometimes, lenders may offer zero interest for a set period without charging a transfer fee. That’s a perfect scenario for reducing the credit card debt you may have incurred over the holidays.
The primary reason that zero balance transfer fee programs prove beneficial stems from the overall savings. When moving debt to an account that charges lower interest rates, fees essentially increase the threshold. For instance, an APR of 9.95 percent plus a 5 percent transfer charge equals 14.95 percent. You enjoy the low APR by avoiding credit cards that add these unnecessary fees.
If you don’t already have a low-interest credit card that waives transfer fees, it may be prudent to apply for one sooner rather than later. As credit card balances tick up, your credit score could decline. FICO scores are a metric we consider when processing applications. The best way to take advantage of no-fee balance transfer opportunities is to apply before credit card balances reach their limits. However, local lenders enjoy discretion, which includes looking at items such as annual holiday credit card debt repayment and other factors.
If you haven’t already, we recommend starting a holiday savings account. Consider using a portion of the money you’ll be saving to create a gift-purchasing fund for 2025.
Strategic planning helps reduce overall holiday spending enormously. Black Friday and Cyber Monday provide historically low prices. Physical and digital coupons also take the edge off expensive gifts. Another way to save money involves using your holiday savings account before the holiday shopping rush. You may be able to take advantage of discounts throughout the year.
When the holidays are over, consider reviewing how much you spent. Add 10 percent and use that figure as a baseline for 2025. Start funneling money into your holiday savings account with the understanding you’ll need that amount before Thanksgiving at the latest.
Debt management, savings, and planning for the future are not mutually exclusive concepts. A comprehensive personal financial plan can help incrementally achieve your short- and long-term goals.
After you take advantage of the low-rate zero-fee balance transfer opportunity, craft a budget. Establish a monthly credit card debt payment that drives the balance down as quickly as possible. Simultaneously, select a comfortable amount to put in the holiday savings account each month. As your credit card balances wane, you can increase your monthly savings.
We hope this information about transferring credit card debt to low-rate programs without paying fees helps you and your loved ones enjoy the financial peace of mind you deserve. If you are interested in saving money for next year, contact CCCU today. Let’s get the process started.
