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Holiday spending hangover? Here's the financial equivalent of Alka-Seltzer





Many of us start the holiday season with good financial intentions, only to see them disappear like a rabbit in a cheap conjuring trick as the magic of Christmas takes hold. When it comes to money, all that seasonal goodwill can have a damaging effect on willpower. American shoppers spent $265.9 billion in November and December last year, up a higher-than-expected 2.7 percent on 2012, according to a Jan. 8 estimate from ShopperTrak.

Of course, not all of that was piled onto credit cards. Still smarting after the recession, many consumers continue to use debit or prepaid cards, although perhaps the smartest use credit ones while paying off their balances in full each month. Nevertheless, the Federal Reserve's latest consumer credit data show "revolving credit," which is nearly all credit card debt, piling on $4.5 billion in the three months ending Nov. 30. December's figures won't be out until February.

Happy new year!

All of this means that some readers have likely started 2014 with the financial equivalent of a hangover. If you're one of them, don't let your headaches get you down. Unless you were close to the edge of bankruptcy before the holiday season started, you can almost certainly find ways (think of them as Alka-Seltzer for money) to ease your pain.

How hard it's going to be to swallow this medicine will likely depend on how big your problems are. So pick and choose from the advice below, and follow the plan that best suits your particular needs.

Balance-transfer credit cards

The easiest way forward is to shift as much of your plastic debt as you can onto balance-transfer credit cards. At the time of writing, IndexCreditCards.com's listings show a broad range of these products, offering zero-percent APRs for long periods, including some of 18 months. Within a pay-down plan to which you're fully committed, that sort of extended time free of interest could provide you with a useful breather from high-cost debt.

However, these products come with special dangers for those who struggle to manage their finances well, and many find they end up owing more when the balance-transfer offer expires than they did at the beginning. So bear that in mind before applying, along with these other considerations:

  1. Expect to pay a one-time balance transfer fee, usually 3 percent of the sum you transfer.
  2. Don't use the card for new purchases or other charges while the zero-percent deal is current.
  3. Your application is unlikely to be approved unless your credit score is in the good-to-excellent range.

Protect your credit score

No matter how tight your finances are in the first few months of 2014, your priority (after eating, keeping the lights on and getting the family to work and school) should almost certainly be to protect your credit score. That's always been important for future borrowing and certain other financial transactions, but now some employers check your credit report before promoting you, and some do so before making new hires. In December, Senator Elizabeth Warren (D-MA) introduced a bill to ban this practice, but its chances of enactment anytime soon seem slim.

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