How Nevadans can better handle holiday credit card debt

By Adam Candee

Friday, Dec. 30, 2016 | 2 a.m.

Packing on a little extra at the holidays goes well beyond the dinner table for many people.

And much like those pesky five pounds, shedding credit card debt often requires more time to shed than it took to acquire.

A recent analysis by Creditcards.com shows that Nevada falls just outside the top 10 nationally in credit card debt burden, measured by weighing average credit card debt held against a state’s median income. The study ranked Nevada 11th overall with average credit card debt at $5,620 and Nevada’s median income at $30,799.

The study assumed that 15 percent of income would go toward credit card debt. Using the national-average interest rate of 15 percent, it would take a Nevada resident 17 months and $624 paid in interest to get out of debt.

Matt Schulz, senior industry analyst for Creditcards.com, recommends taking stock of income and expenses after the holidays to come up with a plan for tackling excess credit card charges that might have piled up during the holiday season.

“Debt can be a little like dieting: It’s OK if you slip up a couple of times in a small way and you shouldn’t beat yourself up too much,” Schulz said. “You just don’t want to go too crazy too often.”

Just as personal choices pile up that debt, picking the best way to pay it down is a matter of preference. A recent study in the Journal of Consumer Research suggests people find more motivation in paying off accounts with smaller balances first because they enjoy the victory of eliminating a debt.

“Evidence from a field study of indebted consumers with multiple debt accounts and from three experiments shows that concentrated (vs. dispersed) repayment strategies tend to boost consumers’ motivation to become debt free, leading them to repay their debts more aggressively,” the study reads.

Schulz advocates both seeking out zero-percent balance transfer offers — which can last nearly two years in some cases — and paying more than the minimum payment each month as top strategies for whittling down credit card bills.

“It really depends on the person,” Schulz said. “So much of paying off debt and tackling that debt is psychological, so if it works better for you to see those small victories to propel you forward and keep you going, then that’s what you should do. The oldest advice is really the best: know thyself.”

As Nevadans continue to recover from the recession, they face challenges that can complicate development of a strategy for financial success.

“If people don’t feel secure about their job, if they’re scared about being underwater with their house, sometimes it can force them to make some decisions that they might not otherwise make, including putting a bunch of expenses on a credit card bill that they may not be able to pay all that quickly,” Schulz said.

To avoid a repeat of any holiday credit-card mishaps, Schulz said consumers must plan out purchases long before a card emerges from their wallet.

“Where you can get in real trouble is going out and just saying you’re going to just see what’s out there,” Schulz said. “You go without a plan and you end up making impulse buys, and getting yourself in a lot of trouble.”

The states carrying the highest credit card debt burden are Alaska, New Mexico, Georgia, Texas and Florida. North Dakotans have the lowest debt burden in the country, followed by Iowa, Minnesota, Massachusetts, and Wisconsin.

Americans owe $747 billion in credit card debt as of the third quarter of 2016.