The holiday season can really get expensive. Between the decorations, presents, and Christmas trees, we feel like we have to spend thousands of dollars. That's why it's so easy to fall into a financial trap set by ads and our own creditors. You may have seen the option to “skip a payment” for the holidays. At first glance, this seems like a great idea. Skipping a payment around the holidays? What can go wrong? Well, these skipped payments can cause serious problems in the long run – and here's how.
When we receive offers that seem so tempting, very rarely do we read into the fine print. There's usually a catch with every offer. Creditors, especially, use the holidays and other special occasions when they know people will be short of money to lure you in. This may be Christmas, Spring Break, or the Summer vacation season. These deals are enticing because they seem so simple and helpful and appear just when you need them. All you have to do is send in an application, pay a small fee, and BAM: your payments for that month are postponed. This can apply to your car loan, personal loan, or your credit card payments, and you might think this means more money for shopping purposes. At first, that is.
What you may not know when signing up for this is that you will still accrue interest for that month. This means even more debt, plus the fee that you are required to pay as well, which can be around $50. You're also allowing your creditor to add an extra month to your original agreed upon length of payments, which means you could actually end up slapping an extra $100-$150 onto your total. The higher the amount is, the higher the interest is, which means even worse for you in this deal.
There is a hidden reason why they give you a month with no payments. The creditors know that without your monthly payment to worry about, you're going to spend more money that month. This works out for them in a big way: you'll spend more money and owe them more as a result. The banks are not so much doing you a favor as they are creating a business opportunity for themselves.
There are a few options to assist you with the financial stress of the holidays that don't involve skipping payments. First, create a budget. Write down each person that you are going to buy for, and how much you are spending on each. Total that up so you know exactly how much you need available for your shopping. This will provide you with a visual and a strategy to avoid overspending on presents and putting yourself further into debt.
If you are already strapped for cash and cannot afford a bill this month, don’t skip it! Take out a payday loan instead. This is a quick cash loan that is basically just an advance on your next paycheck. That means the money they're lending you is money that you know you will have coming back in. A payday loan could allow you to pay your bill on time and prevent excess debt.
With these simple tips, you can take the extra financial stress off of your mind and actually begin to enjoy the holidays. Whatever you celebrate, spending within your means can give you a happy holiday and a happy and prosperous New Year!