Home > Managing Debt > 6 Tips for Battling Holiday Debt Once the Season Ends

Comments 0 Comments

The holiday debt hangover can be very real for those who get carried away on during the festivities of the season. But whether you tend to over-spend when you’re holiday shopping for the people you love or splurge on seasonal trappings and comfort foods, coming into the new year with holiday debt doesn’t have to cripple your money management for the next year. Check out this list of realistic, easy-to-apply tips for how to payoff holiday debt.

1. Consider Applying for a Balance Transfer Card

How you recover financially after the holidays depends in part on your overall financial situation and credit score. If you can swing an approval for a balance transfer credit card, this might be a good move in helping you curtail holiday debt. If it seems counter-intuitive to open a new credit card in the face of existing debt, consider these facts:

  • A balance transfer card with a 0% introductory APR lets you paydown your balance without incurring additional interest charges. That lowers the overall cost of your debt and helps you get rid of it faster.
  • Balance transfer cards sometimes offer this option for 12 to 24 months. That gives you one to two years to pay off your debt in a less stressful way.
  • If you can transfer $1,200 in holiday debt to a card with a 12-month introductory APR of 0%, you can pay it off $100 a month.

The best balance transfer credit cards are often reserved for those with good or better credit, so consider checking your credit score before you apply. And if you do go this route, make sure you don’t run up new debt on your old cards after transferring the balances. That puts you in a position that’s worse than when you started.

2. Reduce Interest Charges by Paying Holiday Credit Card Debt Early

Not everyone may qualify for a balance transfer card, and that’s okay. There are other ways to paydown holiday credit card debt quickly. By paying as much and as early as possible, you help reduce the amount of interest you’re charged.

Interest accrues daily on credit card balances. By making your payment as early as possible in your statement cycle, you reduce the balance for future days. That means there’s less of a balance to calculate interest on, which means you’ll be charged less interest.

It might sound like a small amount, but interest fees add up quickly. Americans carried over an average of more than $1,000 in holiday debt in 2018. Paying off a decent chunk of that amount early could save you more than $100 in interest. Consider the example below.

  • $1,000 balance, 21% interest and payments of $50 each month
    Total interest cost: $241.58
    Time to pay off the debt: 2.1 years
  • The same balance and interest rate but paying $100 each month
    Total interest cost: $108.93
    Time to pay off the debt: 1 year
  • The same situation with a $200 monthly payment
    Total interest cost: $55.97
    Time to pay off the debt: 6 months

3. Create a Realistic Plan for Zeroing Out Holiday Debt

The difference between paying your holiday debt off in six months and two years can be huge, but make sure you’re realistic about your debt reduction plans. You can’t pay $200 a month on a card if you don’t have $200 a month.

Take some time in early January to make a working budget for the new year. Account for all your income and your expenses. Consider what’s left and how much you need to save for emergency expenses or retirement. Then, determine how much extra you can put toward your holiday credit card debt.

4. Find One Thing You Can Give Up Temporarily to Pay Off Debt Faster

If you’re looking at your budget and scratching your head trying to come up with extra money for credit card debt, consider your expenses. Are they all absolutely necessary? If you can give up something, even in the short term, you can divert that money to paydown your debt.

Common expenses people give up to help them payoff their credit card debt include:

  • Eating out—or eating out as often
  • Entertainment expenses, such as cable
  • Extras such as going out every weekend or unnecessary driving
  • Certain types of snacks or beverages that bring the grocery budget up but aren’t needs

5. Consider a Debt Consolidation

If your holiday debt is on high-interest credit cards, you may feel like every step forward is smaller than it should be when paying it off. Balance transfer cards aren’t the only way to reduce the interest rate on this debt. You may be able to use a debt consolidation loan to pay off the credit card balance, especially if you have equity in your home you can use as collateral.

There are a few debt consolidation options can be beneficial if they result in lower interest rates. But make sure you don’t run up your credit card balance again. If you do, you’ll be looking at double the debt you were trying to paydown.

6. Plan Ahead for the Next Season to Avoid a Repeat

Use the Credit.com credit card payoff calculator to get a full understanding of what your holiday debt could end up costing you—and how long it could take to payoff. This can be a real eye-opener and help you see the danger in arriving at the next season unprepared. Make a plan now to reduce over-spending for this year.

You might start saving now, shop throughout the year for gifts to get the best deals or set a budget on what you’re able to spend during the holidays. When you do, make sure you stick with it. It’s the impulse spending in the middle of the season that usually ends up pushing people into debt.

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