Still paying off last year’s holiday debt? Here’s what to do now.

The holidays are a time of giving, but for many, they also come with additional financial strain. This year, holiday spending is expected to increase to an average of $1,638 per shopper, according to the results of PWC’s Holiday Outlook survey — an increase of 7% compared to 2023 and 15% compared to 2022. And, chances are that at least some shoppers will be relying on credit cards to cover some or all of that spending. 

Using your credit cards to cover your holiday spending can be a risky route to take given that today’s average credit card interest rates are sitting at a record high of over 23%. At that rate, any balance you carry from one month to the next can balloon out of control quickly. But any holiday spending you do in the coming weeks can become even more problematic if you haven’t paid off last year’s holiday credit card debt yet. The interest charges alone can make it tough to get rid of your balance, especially if you’re adding to it with more holiday spending this year. 

The good news? You don’t have to let last year’s credit card debt continue to derail your financial goals. There are several proven methods you can use to reduce interest costs and accelerate your credit card debt payoff instead. And, with strategic planning and the right tools, you can expedite the credit card debt repayment process and reclaim your financial peace of mind.

Find out what the best debt relief strategies are for you now.

How to pay off last year’s holiday debt

If you’re struggling to get rid of last year’s holiday debt right now, the strategies outlined below can help you tackle those lingering balances.

Transfer your balances to a card with a 0% APR offer

One of the most effective ways to tackle holiday credit card debt is through a balance transfer credit card. These cards typically offer 0% APR introductory periods lasting anywhere from 12 to 21 months, providing valuable time to pay down your debt without accruing additional interest. While most balance transfers involve a fee of 3% to 5% of the transferred amount, the savings in interest charges often far outweigh this cost. 

Keep in mind, though, that these offers typically require good to excellent credit for approval. It’s also important to create a payment plan that ensures you’ll clear the balance before the promotional period ends. But if you can come up with the right plan and qualify for the right balance transfer offer, this strategy could pay off in multiple ways.

Start getting rid of your credit card debt today.

Consolidate your debt with a lower-rate loan

For those juggling multiple credit card debts from last holiday season, a debt consolidation loan can simplify repayment and lower your overall costs. With debt consolidation, you’re typically able to combine multiple credit card balances into a single loan, which typically comes with a much lower rate than you have on your credit cards. 

Because most debt consolidation loans often have lower rates than credit cards, this approach can save you money and reduce your repayment timeline. And unlike credit cards with variable rates, a debt consolidation loan’s rate remains stable throughout the repayment period, providing peace of mind and consistency in your debt repayment journey.

Explore what debt management plans can offer

If you’re struggling to make progress on your debt due to high interest rates or financial hardship, a debt management plan might be the solution. Offered by credit counseling agencies, these plans work to consolidate your debts into a single monthly payment. The agency also negotiates with your creditors to lower your interest rates or waive certain fees, making it easier to pay off your balances.

While these plans typically require a small monthly fee, the savings in interest can be substantial. The structured repayment plan can also help you stay on track, which could come in handy in terms of expediting the process.

Take the debt snowball or avalanche approach

The debt snowball method offers a psychological boost to debt repayment by focusing on quick wins. This approach involves listing all holiday-related credit card debts from smallest to largest balance, regardless of interest rates. You maintain minimum payments on all cards but direct any extra money toward the smallest balance until it’s paid off. You then roll that payment into tackling the next smallest debt. This strategy builds momentum through visible progress, helping you stay motivated.

The debt avalanche method, on the other hand, takes a more mathematical approach. Similar to the snowball method in structure, this strategy prioritizes debts by interest rate rather than balance. By targeting the highest-rate debt first while maintaining minimum payments on others, you’ll save the most money in interest charges over time. While this approach may take longer to see visible progress, it provides the greatest financial benefit in the long run.

The bottom line

Holiday debt can feel overwhelming, but it doesn’t have to be a permanent fixture in your financial life. By adopting a focused repayment strategy, exploring tools like debt consolidation or balance transfers and making small sacrifices in your budget, you can significantly accelerate your debt payoff journey. The sooner you eliminate last year’s holiday balances, the sooner you’ll free up funds for your future financial goals — and maybe even enjoy a debt-free holiday season this year.