If you’re coming away from the 2023 holiday season loaded up with credit card debt, you’re not alone. A survey by personal finance company Achieve found that half of U.S. consumers expected to take on debt to pay for their holiday purchases last year.
Of course, the problem with holiday credit card debt is that the longer it lingers, the more interest you risk racking up, making that debt more difficult to pay off. Also, too large a credit card balance relative to your total spending limit has the potential to damage your credit score. That could be problematic if you’re forced to sign a loan in a pinch, as it could mean getting denied or getting stuck with an unfavorable interest rate.
Plus, let’s face it — juggling credit card debt can be stressful. It’s not fun to have monthly payments hanging over your head. And it can be especially hard to manage credit card debt when you owe money on different cards. So if that’s the situation you’re in as a result of recent holiday spending, one simple move could make your debt much easier to pay off.
It pays to consider a balance transfer
If your credit score is in decent shape, you may be able to qualify for a balance transfer offer. This allows you to move your existing credit card balances onto a single card so you’re only making one payment per month.
Just as importantly, many balance transfer offers come with a 0% introductory interest rate. Now that rate won’t last forever, as the “introductory” part implies, but it could buy you a good 12 months or more of not accumulating interest on your existing balance. And if you’re not racking up more interest, paying off that debt could be easier.
Of course, there can be drawbacks to doing a balance transfer. For one thing, you might face hefty fees, so you’ll need to read the fine print to see what you’re dealing with.
Also, once your introductory 0% rate runs out, the interest rate on your card could soar. But if you think there’s a good chance you’ll have your holiday tab paid off by the time your introductory period comes to an end, then a balance transfer could make sense.
Start saving now to avoid a repeat
If you took on holiday debt in 2023, there’s no need to kick yourself. It’s hard to say no to holiday expenses when there are people in your life who are counting on you to make the season fun and magical.
But you also don’t want to put yourself in a repeat situation 12 months from now. So as you work on paying off your existing holiday debt, also start saving for the 2024 holiday season so you can cover those expenses as you go.
You may want to consider picking up a side hustle temporarily to free up more cash for holiday savings and debt payoff purposes. Of course, squeezing extra work into your schedule isn’t the easiest thing, either. But it could be your ticket to paying off your recently accumulated holiday debt pretty quickly. And it could make the upcoming holidays a lot less stressful.
Meanwhile, if you realize that a balance transfer doesn’t work for you, you can look at other ways of consolidating debt, like a personal loan. Or, you could tackle your various balances one at a time. In that case, aim to go in order of highest interest rate to lowest so you’re paying off that debt efficiently.
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