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Are You Suffering From a Holiday Spending Hangover?

Last Updated: July 9, 2010

Even with the economy in the doldrums, some people still overspend at Christmas on gifts for friends and family. If you didn't take our advice on how to save $500 for Christmas, chances are you maxed out your credit cards and you are still paying the price - in the form of interest and possibly over-limit charges. Before the next holiday season is upon you, now it the time to take action and get your credit card balances in order.

Are You Over Your Credit Card Limit?

If so, you will be charged a penalty fee, ranging from $25-30. If you only make your minimum payment, you will still be over the limit next month, and guess what, incur another fee. These can add up rapidly, as many people will attest. To avoid these fees, immediately send in a payment equal to the difference between your credit card limit and your credit card balance *plus* your over-the-limit fee. This will ensure that you do not get charged next month for being over the limit.

Your credit card limit is $2,500, but your current charges total $2,577. Your over-the-limit fee is $25, and the minimum payment is $64. What payment do you need to make?

The difference between your limit and your current charges is $77. Is this more than your minimum? Yep.

$ 77   how much you are over the limit
  25   the over-the-limit fee

$102   Total

You should make the $102 payment immediately, to avoid the late charge, which would make your total charges $2,525. With the late fee, you will again be over the limit on your account and you will be charged yet another over-the-limit fee.

What if You Can't Make Your Payments?

Start a Christmas Budget

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