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5 Post-Holiday Tips to Pay Off Debt

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Let’s face it: The holidays may be about spending time with the people you love, but that doesn’t mean things come cheap. In fact, more than half of gift-givers are feeling pressure this holiday season. If that’s you, the post-holiday season is the perfect time to focus on tackling gift-related debt.

“You should absolutely make paying off debt a major priority,” says Matt Schulz, LendingTree chief credit analyst. “Interest rates are sky-high and are likely to grow in the near future. That means that your debt is only going to get more and more expensive unless you take action.”

Here are five tips to help you get it done.

Post-holiday tips to pay off debt

No. 1: Choose your payoff method wisely

When paying off debt, it pays to be strategic. There are two common methods you may want to consider: debt avalanche and debt snowball.

“The best debt payoff method for you is the one that you’re most likely to stick with,” Schulz says. “If you’re simply all about the math and paying down the debt with as little interest paid as possible, go with the avalanche. If you’d prefer to pick up a few quick, early wins to get you fired up, pick the snowball method. Either one is fine. It’s all about knowing yourself and what works best for you. Personally, I’m an avalanche guy, but I totally see the appeal of the snowball.”

No. 2: Don’t forget about savings

Paying off debt can feel all-consuming. But it’s important to maintain your overall financial health as you attack that debt.

“One of the best ways to stop the cycle of debt is to have robust savings,” Schulz says. “If you don’t have that, the first unexpected expense after you pay off your credit card balance will just go right back on that card, and you’ll find yourself in debt yet again. Savings would allow you to pay cash to handle that surprise expense.”

No. 3: Consider a 0% balance transfer card

“There are few better weapons against holiday debt than a 0% balance transfer credit card,” Schulz says. “These cards are widely available if you have good credit, they can save you a ton of money in interest, and they can dramatically shorten the amount of time it takes to pay off your balance. In short, they’re a really big deal.”

You should know, however, that opening a new credit card may impact your credit score. And there may be a fee associated with a balance transfer (typically ranging from 3% to 5% of the transfer amount). To maximize the benefits, you’ll want to divide the total balance (including fees) by the promotional period to ensure you can pay it off before the 0% APR jumps to the usual rate.

No. 4: Look into a personal loan

“If you don’t want another credit card, you can consider a low-interest personal loan,” Schulz says. “You won’t find 0% offers like you would with a balance transfer card, but you can still find real savings.”

In general, you’ll want your credit score to be as high as possible to qualify for a personal loan. That way, you’ll get a lower interest rate. But there are still loan options for those with bad credit. Either way, it’s a good idea to use prequalification — which doesn’t impact credit — to check your chances of approval, and potential rates and fees. That way, you’ll be able to gauge if you’re likely to qualify and — if so — which company offers the best option for long-term savings.

No. 5: Ask your creditor for a lower rate

If you aren’t able to access a financial tool like a balance transfer card or personal loan, that doesn’t mean you don’t have options to pay off that debt faster and save money.

“Call your credit card issuer and ask them for a lower rate on your credit card,” Schulz says. “An April 2022 LendingTree study showed that 70% of people who asked for that in the past year got their way, but far too few people ask. It’s absolutely worth your time.”

If you can get that lower rate, stop charging things to that account and start contributing more than your minimum required payments, you’ll be on the fast track to getting out of debt. But, again, the key is perseverance.


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