How to manage credit card debt when doing holiday shopping

And, he advised, put savings on your “spending” list and set aside some cash. That way, you’ll have some reserves when the holiday bills are due.

Here are some questions and answers about managing Christmas expenses and debt:

Keeping tabs on card spending is especially important because interest rates are rising, which means it will be more expensive if you carry over balances from one month to the next. The average rate on credit cards is over 19 percent, up from 16 percent earlier this year, according to Bankrate.

Buy Now, Pay Later services, including Afterpay, Affirm and Klarna, are becoming increasingly popular. More than a quarter of Americans have used them and most are satisfied with them, according to a new Consumer Reports survey. Short-term loans, typically offered online at the point of sale, allow borrowers to pay part of the purchase up front and pay off the balance in several fixed payments.

But there are reasons to be cautious when using the services. Users may not consider it a form of credit, but, Ellis said, “it’s still debt.” Loans are easy to obtain, so people can take out several and then have trouble managing them. Consumer Reports found that people who had four or more of the loans at once did not make payments at double the rate of those with fewer loans. The survey also found that 10 percent of people who have used these services reported having difficulty getting refunds or stopping payments for items they never received.

If you can’t pay your balance in full, pay more than the required minimum payment. Otherwise, it will take you longer to eliminate your debt and you will pay much more in interest. “Have a general rule of thumb,” Mr. Wright said, such as paying $10 more than the minimum or double the minimum.

A series of studies by researchers at institutions like The Ohio State University found that people who could choose particular purchases to pay for, like coffee at Starbucks or a utility bill, paid more to reduce their debt. The technique increased awareness of what was being paid for, leading to a perception of greater progress toward debt reduction, according to a report on the experiments.

Grant Donnelly, an assistant professor of marketing at Ohio State and one of the report’s authors, said some credit cards, including offerings from American Express and Chase, have options for users to choose specific purchases to pay off over time. But they may charge a fee to set up the payment plan.

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