Enjoying the holiday season is one thing, but paying for it is another. According to the most recent post-holiday debt survey from MagnifyMoney, Americans racked up an average of $1,054 of debt over the holiday shopping season. That’s up about 5% over last year and it’s problematic in that nearly two-thirds of those with debt say they didn't plan on taking it on, and more of it it is on high-interest rate credit cards than in past years. Digging out can be both time-consuming and expensive. The 10 percent of folks who are making minimum payments only will a pay around $500 in interest (at an APR of 15.9 percent) and not clear the debt hurdle 'til 2023. But there are ways to get out from under the holiday hangover quicker, cheaper and possibly even for free:
Turn frequent flier miles/rewards points into cash.
If you’ve done your spending on a major credit card that has a rewards program, you may be able to turn those points (or miles) into cash that you can use to pay down your balance. Redeeming rewards in this way isn’t the most lucrative use of points (that’s generally turning them into a plane ticket) but if they’re keeping you from racking up interest charges, the payoff is significant. Cards including the Discover Cashback Bonus and Capital One Quicksilver allow you to apply your cashback bonus to your statement credit with no minimum. With the Citi Double Cash Rewards and Bank of America Cash Rewards you can apply cash earned to a statement credit but there's a $25 minimum. And Chase Ultimate Rewards and American Express Membership Rewards also offer a rewards point system. With Chase, one point equals one cent, so 100,000 would get you $1,000 in cool cash and with American Express one point equals 0.6 cents. Note: If you’re in the habit of keeping a balance on your card, I’d argue that you should find a card with a lower interest rate. If you occasionally keep a balance, some cards will let you apply your rewards to paying down your balance automatically.
Sell your stuff for extra cash.
Start with technology: The average household is sitting on $264 in unused tech items, according to research by Decluttr.com. So if you’ve got old smartphones, iPods, tablets or laptops lying around in desk drawers, this could be a great time to trade them in for cash. You can do this on sites like eBay or Amazon. You can also ask about available trade-in credit with your phone carrier or get a quote from a tech buyback site like Decluttr.com or Gazelle.com (even if a device’s screen is cracked or it doesn’t power on, a buy-back site should still make an offer). An unlocked iPhone 6s with 128 gigabytes of storage in good condition currently goes for $259 on Decluttr. And don’t forget about those clothes that have been sitting in your closet. If you have luxury items try TheRealReal. If you have more mainstream labels try selling on Poshmark. Furniture and other items can be listed on Letgo, Offerup and Facebook Marketplace.
10 percent of folks who are making minimum payments only will a pay around $500 in interest (at an APR of 15.9 percent) and not clear the debt hurdle 'til 2023.
Look into reselling unused gift cards.
If you received gift cards for the holiday that you know you’re not going to use, or have a stash of old ones sitting in drawers, dig them out and turn them into cash. Sites like CardKangaroo and Raise will buy your gift cards at a discounted rate. On CardKangaroo, the current going rate for a $25 iTunes gift card is $16.38 and $50 to J. Crew would net you just over $37 in cash.
Check to see if you've got any unclaimed money.
If you’ve never looked up whether or not you have any unclaimed funds, now is a better time than most. Here’s the rundown: When people leave money behind via inactive accounts in financial institutions or companies (like savings accounts, stocks, security deposits, IRS refunds, store credits, etc.), it’s kept in a holding account for your state or locality. There’s about $42 billion worth of unclaimed funds in the U.S., according to the National Association of Unclaimed Property Administrators (NAUPA), so you could be due a significant amount. Search your name (and your family members’ names) on MissingMoney.com and Unclaimed.org.
Cash in on insurance policy dividends and/or rewards.
Some insurance companies, particularly insurance cooperatives or member-based companies — like USAA and MetLife — offer dividends at the end of the year. They set their premiums based on estimated costs at the beginning of the year, and depending on how many claims they pay out, they refund the extra budget to members. The amount of money paid out depends on the company and the year, but if your insurance company does this, they’ll either apply it to any balance you have left over or send you a check in the mail between October and January. Checks are often $100 to $200 which can make a dent in your debt. Also, if you’re with a car insurance company that sends you a check for periods of time without an accident, that’s found money. There are some health insurance policies that give you money back as well. Oscar, for health insurance, gives you $1 for every day you walk 10,000 steps — it caps out at $240 a year.
Take advantage of shopping portals and cash-back apps.
When you find yourself shopping to replace everyday items, use shopping portals to rack up cash back. How it works: The more people that visit the website, the more advertising revenue the website earns, and it kicks some of that back to its users. Ebates is one of the most popular portals, but many major credit card companies and airlines have them, too. Cashback Monitor is a tool that can help you figure out which portal will net you the most rewards on the day you’re shopping. You set up an account and enter the portal, then shop at your chosen stores. Every purchase you make while logged in means money added to your website account, but it usually takes up to three months for a check to arrive. You can also use Ibotta, which is a free app that will scan your receipts (or link a store loyalty card) to enable you earn cash back. Users look for deals on the app before they shop at their regular stores, and they receive cash back in their app accounts within 48 hours. You can cash out as soon as you have $20.
Make an actionable plan to pay off that debt.
Unbury.Me is a free online tool that allows users to create an account, list all of their debt and map out a payment plan to suit their needs. The tool offers both the “avalanche” method (attacking the highest interest rate debt first, then moving to the second-highest and so on) and the “snowball” method (focusing on the lowest balance first, then the second-lowest and so on). The first technically saves you the most money in the long run, but the second could be the right choice if short-term wins increase your long-term motivation to funnel more money to your goal. The tool also demonstrates the effect of solely paying the minimum versus doubling up on payments one month.
Or do it subconsciously with Qoins.
The team at Qoins focuses on rounding up each of your purchases to the nearest dollar (much like the investing app Acorns), then applying that cash to your student loan or credit card debt. Almost $1 million in spare change has been saved since the app launched in January 2017, and on a monthly basis, the average user saves roughly $50 to $55 (or $600 plus a year). To get started, you sign up, then link your financial account to begin saving. (Note: The app costs $1.99 a month, but it takes the fee out of your savings pool rather than charging your card.) For users who patronize to smaller financial institutions that aren’t supported, Qoins has an algorithm that analyzes your checking account and pulls out small amounts of money to save daily on your behalf (usually between 50 cents and $5).
With Hayden Field
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