Avoiding Credit Card Debt in Chicago this Holiday Season

Dealing with substantial credit card debt can be frustrating, and it may feel as though you will never be able to get ahead. During the holiday season, many Chicago residents, along with consumers across the country, will spend hundreds and sometimes thousands of dollars on gifts, decorations, and holiday travel. For many families, the additional expenses that accrue during the holidays are beyond their monthly budget. What happens when families do not have the necessary cash to pay for holiday costs? By and large, many of them turn to credit cards. For those Americans who are already struggling with credit card debt, the holidays can be a particularly difficult time.

In some cases, consumers who have unmanageable credit card debts may be eligible for personal bankruptcy. However, consumers cannot simply plan to file for Chapter 7 bankruptcy and, before doing so, rack up additional credit card debt during the holidays. Regardless of your plans for bankruptcy, it is important to consider ways of avoiding additional credit card debt this holiday season.

Costs are High for Holiday Spending, from Gifts to Seasonal Travel

How much do Chicago residents spend, on average, over the holidays? Each year, the American Research Group, Inc. conducts surveys to determine how much the average household plans to spend during the holiday season. According to its fact sheet, last year the average spending per adult totaled $882. That total represents a 2% increase from the previous year, in which the average spending per adult was listed as $861. For some, this might not sound like a lot of money to spend during the entire holiday season. However, this number is the average of spending on Christmas gifts alone. In other words, it does not include purchases for holiday meals, decorations, and other expenses associated with the season.

If the average adult is spending nearly $900 alone on gifts—a number that likely goes well above $1,000 when adding in other costs—how is the average adult paying for these items? According to a recent article in Forbes Magazine, many Americans are swayed by the in-store discounts associated with store credit cards. However, as the article clarifies, these credit cards often serve only to put consumers deeper into debt.

Spending on Credit in Illinois During the Holidays

Last year alone, we mentioned that the average American adult spend $861 on gifts. According to the Forbes article, holiday spending in general “sent the average American $986 deeper into debt.” Many of those debtors decided to use store credit cards in order to receive particular discounts and other perks. In the long run, however, store credit cards may only encourage more spending—of money that consumers do not have—making the small discounts and perks negligible.

Most importantly, consumers need to recognize the different between waived interest and deferred interest. Most store credit cards that offer 0% financing offers during the holidays have deferred interest, which means that all of the interest will come due if you do not pay off the balance within a certain period. Moreover, the APR on a store credit card is typically very high. For instance, a Lowes card “charges a flat APR of 26.99%.” In brief, unless you can afford to pay of the balance in a relatively short period of time, relying on store credit cards to make holiday purchases can set you back further in the long run.

If you have questions about managing consumer debt or filing for personal bankruptcy, an Oak Park bankruptcy lawyer can assist you. Contact the Emerson Law Firm today.

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