Home > Managing Debt > How to Dig Out of Holiday Debt

Comments 0 Comments

[UPDATE: Some offers mentioned below have expired and/or are no longer available on our site. You can view the current offers from our partners in our credit card marketplace. DISCLOSURE: Cards from our partners are mentioned below.]

The holiday season is a wonderful time, but many families charge too much on their credit cards when they buy gifts, throw parties and travel to visit family. That leaves many of us waking up after New Year’s Day to a mountain of credit card debt.

Rather than resign ourselves to paying high interest rates on a large balance for the rest of the year (or longer), cardholders can take some immediate steps to pay off their debt as soon as possible.

1. Consider applying for a card with a 0% APR promotional balance transfer offer.

The first step toward paying down your holiday debt is to minimize or eliminate the the interest payments. There are two ways to do this: The first is to open up a new card with interest-free financing on balance transfers. Competitive cards offer up to 18 months of 0% APR financing on balance transfers and new purchases, most with a 3% balance transfer fee. Currently, the Chase Freedom card features an introductory balance transfer APR of Intro: 0% for 15 months then an ongoing APR of 16.49% - 25.24% Variable .

Another way is to use one of the interest-free “convenience checks” that cardholders often receive in the mail. Just be sure to note what the terms are of the promotional financing being offered. In either case, cardholders should remember that a card issuer rarely will accept a balance transfer between two cards it has issued.

2. Reduce any remaining interest charges.

The most important step in getting out of a hole is to stop digging. Therefore, once you have transferred as much of your debt as possible, you still need to be sure you are not incurring any new interest charges. Stop using your credit cards for regular purchases and switch to cash, checks or debit cards. In this way, you will not add to your existing debt.

If you are unable to transfer all of the outstanding balance from each of your cards, then you need to take steps to minimize the interest charges. You can start by making payments to these cards as soon as you have the money, rather than on the day the bill is due. Because credit card interest is calculated based on the cardholder’s average daily balance, this simple step can dramatically reduce interest charges.

3. Create a plan. 

Once you have taken these short-term steps to reduce or eliminate interest charges, it is time to create a plan to pay off  your credit card debt entirely. Start by looking for ways to increase your income and decrease your expenses, so that you can make the largest possible payment against your debt each month. Ideally, people who are able to get 0% APR promotional financing should try to create a plan that pays off their entire debt before the financing expires and the standard interest rates apply.

When creating a plan, make sure you use all of the tools available to you. For example, many popular Chase cards have the ability to use their Blueprint program, which contains budgeting and goal-setting tools. In addition, Credit.com offers its own credit card payoff calculator that shows how long it will take cardholders to pay off their balances and lets them input their own interest rates and payment amounts.

Christmas may have come and gone, but for many Americans, the credit card debt will remain. By taking steps now to dig out of holiday debt, you can put yourself on the right path for a happy new year.

At publishing time, the Chase Freedom card was offered through Credit.com product pages, and Credit.com is compensated if our users apply for and ultimately sign up for this card. 

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team