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5 Ways to Pay Off Holiday Debt Faster

Long after the holiday season ends, you might be left with more than just happy memories.

If you’re like roughly a third of U.S. adults, you go over budget during the holiday season, and it takes you more than nine months to pay off the debt you’re up on gifts, decorations, travel, or meals.

“The egg nog and mistletoe wear off, but the debts you incur will last far longer than the fragrances of the holiday,” says Gary Garland, an accredited estate planner with New York-based Integrated Wealth Solutions.

Fortunately, there are ways to tackle that big holiday bill and pay your debts off early. Here are five worth investigating.

1. Look for Lower Interest Rates

Interest rates on debt work against you. When you’re accruing interest, less of your payment goes toward your debt and it takes longer to become debt free. Here are a few ways to reduce or eliminate high interest debt and pay off holiday bills faster:

Transfer Your Balance

Balance transfer credit cards can be a big help with paying off debt. That’s because these cards often come with introductory, interest-free periods. That means you can transfer your debt onto the new card, and you’ll have some time to pay down the balance before accruing new interest charges.

Here’s what you should look for when shopping for a balance transfer card:

  • Balance transfer fees: Check to see if there’s a balance transfer fee and how much it is. Typically, it’s a flat 3% of the transfer amount. So, for example, you might pay a $60 fee to transfer $2,000.
  • Introductory rates: Make sure you know how long the interest-free period is (usually 6-24 months) and how interest is calculated. You might be charged interest on new purchases made during the introductory period.
  • Interest rate: Check to see what the interest rate will be after the introductory period ends. If you know you can pay off the debt before then, the rate might not be a factor in your decision.

Take Out a Personal Loan

It might seem counterintuitive to take on more debt, but personal loans can be part of a good strategy for paying off debt.

That’s because interest rates on personal loans are often much lower than credit card interest rates. For that reason, using a personal loan to pay off credit card debt with higher interest rates could reduce the overall interest charges on your debt and help you pay it off faster.

Ask Creditors for Help

Credit card interest rates are notoriously high, and they may increase even more if you fall behind on a payment. Unfortunately, almost 90% of people say they used credit cards (including store credit cards) to cover holiday expenses in 2021.

The good news is that sometimes creditors are willing to cut you a break … if you ask. It can be as simple as calling the card company and requesting a reduction in your interest rate.

If you’re facing a financial emergency, creditors may even offer you a special hardship program. Just make sure you ask about interest fees that might accrue while on the program and ask how your credit reports and scores will be impacted.

2. Prioritize Certain Debt

Once you’ve done the work to reduce your interest rates, the next step is to prioritize your debts.

For the fastest and most cost-saving approach, try the Debt Avalanche Method (not to be confused with the Debt Snowball Method). It might sound complicated but it’s actually pretty simple. Here’s how it works:

  1. List your debts in order, starting from highest APR (which includes both interest rates and fees) to lowest.
  2. Make the minimum payments on all of your accounts, but pay extra towards the highest APR account any time you can.
  3. Once you pay off the highest APR debt on your list, apply the money you were paying toward that account to the next debt on your list.

Note that you’ll need to take some extra steps when it comes to paying off loans.

If you plan to pay more than the minimum due on a loan, make sure to tell your lender the money is for the principal balance. If you don’t, they’ll hold the extra funds as a credit toward your next payment and it won’t help you pay off debt any faster or cheaper.

You’ll also want to check and see if the lender has a prepayment penalty. If so, consider putting the extra cash toward the next debt on your list.

3. Make Payments Throughout the Month

If you carry a balance from month-to-month, you’ll always be accruing interest. On some accounts you even accrue interest every day. So rather than waiting for the due date to make a monthly payment, send smaller payments as you have the money.

 4. Review Your Spending

The idea of restricting your spending might feel like punishment, but in reality, it can be your ticket to becoming debt free. For each dollar you cut, even if it’s just a temporary cut, you’ll have an extra dollar to pay off your holiday debt.

Not sure what you can eliminate? Try reviewing your bank and credit card statements to see if your spending fits your priorities. As you look over your expenses, ask yourself the following questions:

  • What can I cancel or suspend in order to save money?
  • What’s the biggest expense I can go without for a few months?
  • Can I get a better deal on certain items?
  • How can I plan ahead to avoid this expense?
  • Is there an entire category I can cut for 3 months, like dining out or clothes shopping?
  • Is this purchase really worth the price tag?

 5. Earn Some Extra cash

Cutting expenses isn’t the only way to come up with extra cash for bills. If you want more money to eliminate that holiday debt, consider looking for an additional stream of income, whether it’s temporary or permanent.

Here are some ideas to get you started:

  • Sell old instruments, tools, jewelry, toys, clothes, or vehicles.
  • Rent out your spare room.
  • Stay with family and list your home as a vacation rental.
  • Run errands or do chores for friends and family.
  • Offer consulting or coaching based on your professional expertise.
  • Look for a better-paying job, a promotion, or ask for a raise.

Professional Help is Available

If your holiday debt feels unmanageable, or if you just want help improving your finances, nonprofit credit counseling can help.

When you work with a certified credit counselor you’ll get help exploring all of your options for becoming debt free, including negotiating with creditors, debt consolidation plans, budgeting, and if necessary, even bankruptcy.

Sarah Brady is a Personal Finance Writer and educator who's been helping people improve their financial wellness since 2013. Sarah writes for Experian, Investopedia and more, and she's been syndicated by Yahoo! News and MSN. She is a workshop facilitator and former consultant for the City of San Francisco's Affordable Home Buyer Programs, as well as a former Certified Housing & Credit Counselor (HUD, NFCC). Sarah can be contacted via

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    1. N.A. (2020, August 28) How long can I keep a low rate on a balance transfer or other introductory rate? Retrieved from
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    3. Dickler, J. (2022, January 6) 1 in 3 Americans overspent during the holidays, boosting credit card balances. Retrieved from
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