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How to Pay Off Holiday Credit Card Debt Quickly
The holidays are over and you’re trying to get back into a routine for the New Year, but there’s one thing that is left from last year – your holiday credit card debt!
According to LendingTree, 36% of Americans have credit card debt in 2024 from the holidays, averaging around $1,181.
They also found that 42% of them have an interest rate that is 20% or higher.
With high interest cards, it can take a long time to pay off that debt if you don’t have a plan. In this post I’ll share some tips on how to pay off that holiday debt fast and save hundreds of dollars on interest charges.
Understand Your Current Financial Numbers
Before you can make a plan on quickly paying off credit card debt from the holidays, you first have to understand your current monthly income and monthly expenses.
Making a monthly money plan will give you a clear picture on how much money you actually have available to pay off your debt.
To do this, create a zero-based budget, where you will list all your expected income for the month then list all your expenses and money planned for savings and debt.
Account for every dollar that is coming in with every dollar that is going out. The goal here is to have a plan for your money before you spend it.
This will show you if your expenses are beyond our income or if you have margin left over. You will most likely have to make adjustments before Income – Expenses = 0.
Make a Debt Pay Off Plan
Now that you have an understanding of how much credit card debt you have from the holidays, it’s time to make a plan to pay it off.
There are 2 different debt pay off strategies you can use; the debt snowball method or the debt avalanche method.
With the debt snowball method you will list all your debts from smallest to largest balance – starting by paying off the smallest balance first and then the next. Continue until all your debt is paid.
With the debt avalanche method you will make a list of your debts from highest to smallest interest rate – starting by paying off the highest balance card first. Continue down your list until the debt is gone.
Most people think they should pay the highest interest rate card first but it may not make much of a difference in the end.
I prefer the debt snowball method. Starting with the lowest balance first gives you quick wins.
Being able to pay off the smallest card first gives you a feeling of progress and you’re likely to keep going.
You can always compare the 2 methods with an online calculator. You might see that the payoff period and interest saved isn’t that big of a difference.
Creative Ways to Boost Your Income
Making more than a minimum payment on your credit card is how you reduce their balances faster. One way of doing this is to find creative ways to earn extra money to put towards your debt.
Here are some examples on how to earn extra money.
Part Time Job or Side Hustle
Is there some part-time work or side hustle you can do while you’re paying off debt?
It doesn’t have to be a formal job. What is something you are able to do or good at that can help others?
- Some side hustle ideas:
- Shovel/plow snow
- Yard work for neighbors in the spring
- Babysitting
- Helping a friend organize her closet
- Selling crafts in person or online
- Cleaning houses
Income opportunities are endless. I’m sure there is something you are good at that can help others. If you’re not sure where to start, brainstorm a list of all the things you are good at and enjoy doing. I’m sure something will come to mind – and it doesn’t hurt to try!
Sell Things You No Longer Need
The beginning of the year is a great time to declutter items from your home that you no longer use or need. You can earn extra money by selling those items on Facebook Marketplace, Craigslist or at a local consignment shop.
It’s a win win because your home will feel less cluttered and you will be paying off your credit cards!
Use Money From Cash Back Rewards
Instead of buying more things with money earned from cash back rewards, use it for an extra payment on your credit cards.
Did you use Rakuten while you shopped for Christmas? When you receive your Big Fat Check from Rakuten in February, put it towards your debt!
And if you haven’t signed up for Raktuen the what are you waiting for? You can get money back from your favorite stores – including your weekly grocery shopping on Instacart or Walmart.
Cut Back on Expenses
Besides increasing your income, another way to free up cash for credit card payments is to cut back on current expenses.
Take a good look at your current budget and see where you can cut back.
Start by looking at these 3 key areas that are common for overspending.
Subscriptions
Are you using all those streaming services that you are currently paying for?
Cancel or pause the ones you aren’t interested in anymore. You can always go back to it later if your favorite show comes back.
Many platforms have different pricing tiers for different serves as well. Review your options and downgrade to the lower tier if that works for you.
Also take a good look at any services you are paying for that may have accidentally been added to your account.
If you have small kids that love to control the remote you may be paying for a subscription you don’t even want. Even with the pin protection in place, somehow my kids still end up signing up for things.
Food
Whether it’s grocery shopping or eating out, it’s easy to overspend on food.
Planning meals ahead and buying items when they are on sale can help with cutting back on food costs.
Eating out is more expensive than eating at home. Take a close look at how much you are eating out a month, meals and coffee stops. Can you make more things at home?
Impulse Buys
Another way to cut back on expenses is by reducing impulse purchases. A great strategy is implementing a 24-hour rule—if you see something you want but don’t need, wait a full day before buying it.
This gives you time to decide if it’s truly worth the cost or just a spur-of-the-moment desire. You can also try leaving items in your online cart for a day or two; often, the urge to buy will pass, and some retailers might even send you a discount to encourage the purchase (which you can ignore if it’s not a necessity!).
Curb impulse spending is by sticking to a written shopping list. Whether you’re grocery shopping or browsing online, having a list keeps you focused on what you actually need. Unsubscribing from marketing emails and avoiding social media ads can also help reduce temptation—out of sight, out of mind!
Avoid Adding More Debt
Here’s a hard truth – you will never get out of credit card debt if you keep charging more things to your credit card.
This is one reason why having a written budget is critical. Having a plan ahead of time to pay cash will prevent those additional charges on the card.
Take the card out of your wallet and put it in a drawer. Or better yet…cut it up and stop using it!
Your cards are probably also linked to several online accounts. Update your online accounts to your debit card.
Track Your Progress to Help You Stay Motivated
Recently I heard that the greatest motivator to do something is seeing progress.
Stop and think about that for a minute.
If you know you are making progress in any area of your life, you are more likely to keep doing it.
If you don’t see progress then it’s easier to give up.
Sometimes we need to see the progress we are making. A fun and simple way to do this is by breaking down your big debt payoff goal into smaller goals and using a credit card payoff tracker.
Conclusion
Paying off holiday credit card debt quickly is absolutely possible with the right plan and commitment. By understanding your financial numbers, creating a solid payoff strategy, increasing your income, cutting unnecessary expenses, and avoiding more debt, you can take control of your debt and move forward with confidence.
To help you stay motivated, grab my Credit Card Payoff Tracker! This printable will help you stay organized and track your progress as you pay down your balances.
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How to Use the Debt Snowball to Pay Off Debt Faster
The Best Way to Pay Off Multiple Credit Cards
The Best Budgeting App for Managing Your Money
Get Paid to Shop: Boost Your Savings with Rakuten Cash Back
