Many Americans end their vacations with something new Debt balances.
This season, 36% of American consumers have taken on holiday debt, according to a New scan From Lendingtree.
Those who collected credits this season took out $1,181 in debt on average From $1,028 in 2023. However, that’s still less than $1,549 in 2022, LendingTree found.
Less than half — 44% — of people who have taken on debt expect to get those balances, a sign that this holiday season remains financially challenging for many people, according to Matt Schulz, senior credit analyst at LendingTree.
He said rising prices caused by inflation remain an issue for many individuals and families this holiday season.
“Some people just want to end what has been a tough year by spreading a little joy, and they may have ended up taking on a little extra debt to do so,” Schultz said.
Those most likely to take on debt this season are parents of young children at 48%; Millennials ages 28-43, 42%; and individuals earning between $30,000 to $49,999, up 39%, according to LendingTree.
Consumers who went into debt during the holidays run the risk of continuing to carry those balances when the holiday season comes next year. Nearly half of Americans still have debt from last year’s holidays, WalletHub was recently found.
Meanwhile, paying off debt is one of the most important financial solutions for 2025, according to a recent report Clear Bankrate.
For those who want to get out of debt, it’s helpful to start as soon as possible, Schulz said.
Success in eliminating those balances has its own reward on the road to freedom, said Laura Mattia, a certified financial planner and vice president of Wealth Enhancement Group in Sarasota, Florida, who works with clients at all levels of wealth.
“People like to be debt-free,” Mattia said. “The idea of not owing anyone any money is very comforting.”
Negotiate your interest rates
For those who took on vacation debt, 42% said they were paying interest rates of 20% or higher, usually through credit cards or store cards, LendingTree found.
The good news is that it’s possible to get better interest rates — and thus lower the total amount needed to pay off your debt — by pursuing either a 0% balance transfer credit card or a debt consolidation loan.
“There’s no better weapon against credit card debt than a 0% balance transfer credit card,” Schultz said.
Most offers offer either 12 or 15 months without interest accruing on the transferred balance, he said. However, balance transfer fees may apply.
Choose a debt payoff strategy you can stick to
These people in debt may want to choose from different strategies to address their balances.
This includes the avalanche method – which prioritizes debts with the highest interest rates first – or the snowball method – which puts the smallest balances first.
“What really matters most is finding what works best for you and that will keep you motivated,” Schultz said.
Mattea said she often advises clients to start with small balances first, so they can immediately feel better about their situation.
“What holds people back the most is when they feel like they’re not making progress and give up,” Mattia said.
Try to increase your savings
While paying off debt balances may be the primary goal, it also helps to set aside some cash for emergencies.
That way, when unexpected expenses arise — or the next holiday season approaches — you may not have to rely as much on credit cards, Schulz says.
“One of the best ways to get out of the cycle of debt that many people find themselves in is to save while paying off their debt,” Schultz said.
However, it is important to keep in mind that the best interest rates available on savings are around 5%, while credit cards charge fees higher than 20% and are prioritized accordingly, Mattia said.
Celebrate small victories
“Following the holidays, give yourself grace if you spend more than you intended,” said CFP Jesse Sell, managing director at Prevail Financial Partners in Stillwater, Minnesota.
“It’s not uncommon to let good discipline go for a few weeks during the holidays,” Sell said.
As you work to pay off your overall debt, he said, it’s helpful to break it down into smaller goals you can celebrate along the way.
Once you achieve a smaller accomplishment, celebrate that victory with a small reward.
Admittedly, paying off debt isn’t really fun, Sell said.
“Try to find ways to take some positives out of it and keep the momentum and focus,” Seale said.