Paying Down Your Holiday Debt

It's time to tackle those holiday bills.

Remember Christmas? It was only two months ago. But, if you put part of your holiday cheer on a credit card, your debt is probably still hanging around. Overspending happens every year during the holidays, but now it’s time to get serious about paying it down.

According to Lending Tree, in 2024, 36% of Americans took on debt during the holidays with an average balance of $1,181 – almost 15% more than last year. Most people put debt on credit cards or store cards.

Paying down the extra debt can upset to your budget. If you ended up overdoing it a bit around the holidays, it will take some work to get your budget back on track. But you can do it.

Make a Plan

• First, be sure to add your credit card payments to your budget this year. But don’t let it take the place of putting money aside for your emergency savings plan. One way to break a cycle of debt is to save up for those unexpected costs in life that often are managed by putting the bill on a credit card.
• Next, pick a payment method: The Snowball Method or the Avalanche Method.
  • Snowball Method: you pay as much as you can toward paying down the smallest debt first, then apply that payment to the account with the next smallest balance, and so on.
  • Avalanche Method: you pay as much as you can on the credit card balance with the highest interest rate first. Then, after you pay it off, add that amount to the account with the next highest interest rate, and so on.

Each method has pros and cons to weigh, so carefully consider what is best for your budget. Paying down debt can seem overwhelming, but the important thing is you find a plan that works for you and then stick to it

More Tips

• Additionally, you can consider making a balance transfer to a card with 0% APR for balance transfers to secure lower interest rates.
• Meet your payment goals by scheduling your payments. Set a date for the minimum payments to automatically come out of your account, then set another date later in the month for an extra payment.

No matter how much debt you incurred over the holidays, make a plan, find the best interest rates, and stay diligent in paying it back.