3 Strategies for Paying Off Holiday Credit Card Debt

Article originally published on Dec 30, 2019 and updated on Dec 1, 2022.

Christmas may be over, but for most people there is still one last Christmas-related event: Paying off Christmas bills. It is a sobering reminder that it takes funds to pay for Christmas fun. Those who get into holiday credit card debt usually take about five to six months to pay it off, meaning that Christmas costs even more thanks to interest charges.

It is a whole lot easier to get into debt than pay it off. Nevertheless, many, many families are able to adopt new habits that allow them to attack debt. Month by month they whittle down their debt and if they keep up the pace, they end up joining those Americans who enjoy the benefits of living with no credit card debt.

Here are four easy strategies to help pay off holiday credit card debt.

Credit Card Debt Strategy #1: Create a Payoff Plan

The best way to start tackling your credit card debt is by figuring out how much you can afford to pay each month to reduce the balance owed.

Zions Bank’s Credit Card Payoff Calculator can help you create realistic repayment goals. Once you determine how much you can afford to pay each month, set up an automatic monthly payment.

And while the temptation to pay only the minimum monthly payment can be great, you should try to pay more. Banks and credit card companies usually calculate the monthly minimum payment due as a percentage of your outstanding balance. The percentage is usually more than the interest rate they are charging on your balance, but low enough to make the minimum payment amount seem attractive.

Credit Card Debt Strategy #2: Consider a Balance Transfer

Credit card balance transfers — paying off one credit card with another — come with several caveats that should give consumers pause before jumping in. Under the right circumstances, however, moving credit card debt from a higher-interest to lower-interest environment can be a smart way to diminish debt.

A credit card balance transfer may make financial sense for you if some or all of the following conditions apply:

Credit Card Debt Strategy #3: Consolidate Your Debt

As interest rates increase, paying off debt that carries a variable-interest rate will become more difficult – but also more necessary. Credit card balances may be particularly difficult to pay down because of the variability of the annual percentage rate (APR).

One option to help consolidate debt and potentially pay it off more quickly is a home equity credit line — also known as a home equity line of credit (HELOC) — that allows homeowners to borrow based on their home equity through a revolving line of credit.

Home equity credit lines typically carry lower interest rates than credit cards or personal loans and use simple interest rather than compound interest — meaning you only pay interest on the original borrowed amount, unlike a typical credit card.

Additionally, a longer repayment period also means the monthly payments will be smaller than with a short-term loan.