Ghost Of Christmas Debt Can Haunt For Years To Come

As credit card holders pile on debt, banks are jacking up interest rates on many cards, which could spell doom down the road for undisciplined holiday shoppers.

If that doesn’t deter you from charging up your cards this holiday season, maybe this will: Buy a bundle of snappy gifts this year, and you could still be paying for them in December 2018.

If a consumer with an average $1,800 balance makes the minimum payments each month, it would take 18 years to pay off, said Ruth Susswein, executive director of Bankcard Holders of America.

For that reason, consumers should use caution and rationale in using their credit cards to purchase gifts, said John Rawlings, a certified financial planner in Florida.

One of his suggestions is not to spend more than what your discretionary income can clear within a 90-day period.

To further ensure that, consumers should deduct credit card purchases from their checkbooks immediately, said Paul Richard, vice president of the National Center for Financial Education in San Diego. The not-for-profit organization provides information to help people become better spenders, regular savers and more careful credit users.

“People should keep in mind the amount of finance charges that will increase the cost of their purchase,” Richard said. “So even if a person buys a sweater for 20 percent off, that discount is wasted if the item is not paid off in full during the grace period. In some cases, using credit cards can add 25 percent to the cost of a Christmas gift.”