Holiday Credit Card Bills: How to Create a Payment Plan for Yourself

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Holiday debt doesn’t have to drag you down. Here’s how to shed it.

Key points

  • The holidays are a common time to rack up debt.
  • The sooner you get rid of yours, the less it will cost you.

The holidays may be a wonderful time of the year that people look forward to, but they can also be really expensive. In fact, it’s not uncommon for consumers to end the holidays with credit card debt, and that’s a good way to put a damper on an otherwise joyous time.

If you’re starting off 2023 with a host of credit card bills you need to pay off, don’t panic. Instead, follow these steps to eliminate that debt as quickly as possible.

Step 1: Assess your balances

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You might owe a mere $200 on one credit card, but that card might have a relatively low interest rate compared to your others. Should you try to pay that card off first? No.

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As a general rule, if you’re going to tackle your credit card bills individually, it pays to prioritize the ones with the highest interest rates, and then work your way downward. That could mean chipping away at a $1,000 balance, even when a $200 balance seems (and is) easier to pay off quickly.

Step 2: See if debt consolidation makes sense

Juggling multiple credit card bills can be tricky. And it can be costly. A better bet may be to see if there’s an affordable way to consolidate your debt.

One option is to do a balance transfer, where you move your existing credit card balances onto a single card with a lower interest rate attached to it. Many balance transfer offers will actually give you 0% interest for a period of time, and if you can snag a deal like that, you’ll get a reprieve from racking up interest as you work your way out of debt.

Another option for consolidating your credit card bills is to take out a home equity or personal loan. Both options let you make one monthly payment instead of potentially having to keep track of four or five.

Step 3: Try to cut your spending or boost your income

You’ll need money to get ahead of your debt, even if you manage to consolidate it. To that end, aim to reduce your spending to free up cash, whether by canceling services you don’t use that often or being more frugal with regard to things like food.

Another option? Get yourself a side hustle and use your earnings to pay off your debt.

Granted, you may need to set aside some of your side gig earnings for tax purposes if your wages aren’t taxed from the start. But let’s say you earn $100 a week on a freelance basis as extra money, and you have to set $30 of that aside for the IRS. That’s still a good $70 a week you can use to pay down your holiday balance.

Get yourself debt free as quickly as possible

The sooner you pay off holiday credit card debt, the less interest you’re apt to accrue on it. You may not be able to shed your holiday debt in weeks or months, but if you stick to this plan, there’s a good chance you will end up debt free by the end of the year.

That said, as you work to get rid of your holiday debt, do your best to also put money into savings for the 2023 holiday season. That way, you won’t wind up in a similar boat next time.

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