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Scary financial situations and how to avoid them

Thanks to a rapid succession of major holidays — like halloween, Thanksgiving, Christmas, and other fall and winter holidays – it might feel like the “holiday season” is turning into “debt season.” Bankrate’s survey of holiday shopping found that 27 percent of holiday shoppers going into debt for holiday expenses. And half of holiday shoppers will start shopping on Halloween.

This time of year does such a good job of thinning our wallets that navigating through the joyous times often becomes a feat of survival. But don’t be afraid. While making financial mistakes during the holiday season can cost you more than during the quieter months of the year, there are ways to stay on top of your financial health. Below, we’ll explore some scary financial situations to be aware of and how to avoid them.

Credit card debt

Problem: Credit card debt is never a good thing, but it is even worse during the holiday season when you need to spend more money on gifts, food, decorations and other items.

The solution: Investigate repayment or debt repayment options.

While paying off credit card debt may seem like wishful thinking, it’s not. At least, that’s only when you’ve exhausted the options that might be available to you. One of the best ways to pay off any high-interest credit card debt is to 0% APR credit card. There are many cards that offer an introductory APR of 0% for purchases and balance transfers for up to 21 months.

So, if you qualify for new credit, you may have almost two years to pay off your balance. Admittedly, this method is not for everyone, and you have to be disciplined to avoid going into debt again. Of course, there are other ways to pay off your credit card debt also including debt consolidation loans and more.

Miss a credit card payment

Problem: In a holiday fog, you forgot the due date and missed a payment.

The solution: Don’t beat yourself up. Seriously. You usually won’t lose your credit score for just one late payment, as long as you fix it as soon as possible.

If you discover your mistake quickly (eg a few days or weeks after the due date), just go ahead and send the payment. Even then, the bank will most likely charge late fees or interest on your credit card balance. None of these penalties will hurt you too much, and your bank probably won’t report your late payment to a credit bureau as long as you make a payment within 30 days of the due date. Some banks might even give you up to 60 days before reporting late paymentbut it is better not to roll these dice.

If you have an otherwise excellent payment record, you may be able to get late fees or interest waived. Simply call the bank, explain what happened, and politely request that any late fees or interest be waived as a one-time courtesy (but only after you send payment).

Tap into your emergency fund

Problem: This holiday season feels like an emergency, so you’re going to be tapping into your emergency fund.

The solution: It may look like an emergency, but it is not. Instead, start building a vacation fund.

You have a emergency fund for a reason — and if you don’t, you should. Experts recommend that you have access to at least three months of expenses in the event of a serious problem, such as health problems, job loss, car problems, etc. Holiday shopping doesn’t count.

Avoid dipping into your emergency savings unless you are facing a real emergency. Consider instead set up a vacation fund that will get you through the holiday season and help you avoid the financial component of the post-holiday blues. (Yes, it’s a real thing.)

Identity theft

Problem: You have just learned that you have been the victim of identity theft.

The solution: Breathe deeply. There are well-described steps that will help you out of this scary situation.

In 2021, the Bureau of Justice Statistics released its Report “Victims of identity theft, 2018”. According to the report, “about 23 million people, or about 9 [percent] of all US residents age 16 or older reported being victims of identity theft in the past 12 months.

So in 2018 alone, 9% of US residents age 16 or older were victims of identity theft – it’s scary. But there’s more to these statistics: “5% of residents aged 16 or older have experienced at least one incident involving the misuse of an existing credit card, and 4% [percent] had been the victim of misuse of an existing bank account. However, it is important to note that “less than 1 [percent] had their personal information misused for other fraudulent purposes, such as obtaining medical care, employment, or government benefits.

If you are a victim of identity theft, there is several steps to follow in order to quickly neutralize the threat and minimize the damage to your financial well-being. And fortunately, you are almost never responsible for fraudulent use of your credit card or bank account. However, you are responsible for report credit card fraud at your financial institution as soon as you find out.

The bottom line

The holidays are stressful enough on their own, and being affected by other financial worries only compounds the problems that already exist. What you can do, however, is treat some of these worries as a challenge to do better. Take the time to tackling your credit card debt or create a vacation fund.

While there’s no surefire way to avoid identity theft, it’s a good idea to use this experience to start. monitoring your credit. And if you make a simple mistake like paying a late bill, fix it quickly and be done with it.