Home > Managing Debt > Still Paying Off Holiday Debt? How to Make a Plan

Comments 0 Comments
Advertiser Disclosure


Outstanding credit card debt increased by $29.2 billion from November to December 2014, reflecting the typical spending frenzy that comes during the holiday season (for comparison, it jumped only $8.2 billion from October to November, according to Federal Reserve data). Of course, a surge in credit card debt is something that can last long after the holidays end, and if you’re still paying down those high balances, you’re not alone.

Say you spent an extra $1,000 in December on your credit card with a 13% APR (that’s about average). Even if you threw $300 a month at that bill since you got it, you would be close to paying it off by now, but not quite there yet, and your balance will have grown by $24 by the time you pay it off. If you’re chipping away at the debt slowly — say, $100 a month — you’ll just finish paying for last year’s gifts by the time the 2015 holiday season arrives. It’s remarkable how long it can take to pay off a seemingly small amount of money.

When you’re working on getting out of debt, you need to commit to a realistic repayment plan. That makes the rest of the sometimes-difficult process much easier.

Explore Your Options

Start by figuring out exactly how much debt you have and what the interest rate is. You can plug those figures into this credit card payoff calculator and see how quickly you’ll get out of debt by continuing to make the monthly payments as you are now. If the debt-free date it calculates isn’t where you’d like it to be, it’s easy to see how changing your monthly payment amount can get you out of debt faster.

Changing figures in a calculator is the simple part — allocating extra money for credit card payoff will get you out of debt faster, but it’s crucial you determine an affordable amount. Unrealistic goals will only frustrate you and set you up for failure.

Figure out how much you can afford to pay each month, commit to paying it, and as long as you don’t continue increasing your credit card balance, you can confidently look forward to reaching your debt-free date. Paying off that debt will also have a positive impact on your credit scores as you lower your credit utilization rate — a nifty number that compares your credit card balances to your limits. You can see how your credit utilization is impacting your credit scores for free on Credit.com.

Choose Your Approach

If you have more than one credit card with a balance, you may not be sure what’s the best way to tackle the debt. There are many strategies with different advantages and drawbacks, so you need to decide what approach is most likely to help you succeed.

Some people like to start by paying off their smallest balance card first. The sooner you experience success, the more motivated you will be to pay off the next debt. That’s the idea, anyway. It’s called the snowball method: Start small and build momentum for eventually getting rid of all the debt.

If you’re trying to get rid of your debt as quickly as possible, there’s the avalanche method: Start by attacking the balance with the highest interest rate, because the balances on your lower-interest cards won’t grow as quickly. Go big from the beginning so you can move out of living in debt as soon as possible.

The most important thing about making a debt-payoff plan is your ability to complete it. It’s can be a huge challenge to stick to your goals, so make it easier on yourself by being honest about what you can afford and what motivates you.

More on Managing Debt:

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