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How to Manage Your Holiday Credit Card Debt



Maintaining a budget is hard at any time of year, but when the winter holiday season is on the horizon, and the time has come for gifts to be purchased, decorations to be pulled out and updated, and parties to be thrown and attended, budgeting can easily and quickly fall by the wayside.

While it’s no big deal to swap a restaurant meal for a home-cooked dinner during the year, it can feel like your best laid plans go to waste once Thanksgiving hits. Between holiday celebrations, extra treats for coworkers, travel plans, and more, it’s easy to see how, for Americans, the average Christmas debt is around $1,054.

The scariest part? While more than half of the respondents to a MagnifyMoney survey said they would pay down the debt in three months or less, around 30% said they would need five months or more to pay off the holiday debt on their credit card.

In order to avoid being part of that statistic—and avoid interest rates that could haunt you well into 2019—here are some budgeting tips as well as tips for how to manage credit card debt.

Making a Budget… with Wiggle Room

The most important thing to do, if you haven’t already, is to make a budget that includes holiday spending. The tricky part is being analytical about your expenditures and making a realistic budget, so that you can hopefully avoid Christmas debt.

Don’t pick your numbers out of thin air. Consider what events you’ll be attending, who you want to purchase gifts for, and if you’ll exchange presents with your coworkers. And remember, it’s also the season of charitable donations.

Being realistic in the early stages of planning is a great way to make sure that you don’t end up paying off the holiday on your credit card months from now.

When you’re creating a spending game plan for the holidays, it’s essential to allow for some wiggle room in your budget. Otherwise, you could end up going over. Small expenditures like picking up wine for a Hanukkah party or buying a last-minute stocking stuffer for your friend’s new baby can add up. Consider baking an extra $200 or $300 into your holiday spending budget to keep a good buffer.

Tracking Your Actual Spending

Once you have a plan, it’s time to hit the stores. Or the internet. Either way, don’t forget to track your purchases as you go, so that you can make sure you’re staying on target. The simple act of recording every payment can help you think more about where your money is going.

And having this data on hand can help you plan next year’s holiday budget more realistically. Consider downloading a free app to track expenses so that you can easily log each dollar, no matter if you’re in a store, at work, or surfing the web in your pajamas.

Tightening Your Belt on Non-Holiday Splurges

Unless you’ve stashed away extra money to spend around the holidays, shopping could put you way over budget. And while treats like hot cocoa or cookies may be what you’re in the mood for during the holidays, cutting back on these treats can make a big difference in avoiding too much December debt.

General belt-tightening, like skipping the morning peppermint mocha at the coffee shop and sticking with a regular cup of joe from home, will help too. If you’re concerned about racking up credit card debt between holiday sweets and gifts, you may even want to consider avoiding swiping your credit card altogether. Try only paying for gifts or decorations with cash or a debit card as opposed to vowing to pay for it later with a credit card.

Finding Extra Savings

If you’ve done your budget and tracked your spending, but still seem to be coming up short, it may be time to double down on your savings. Outside of Black Friday and Cyber Monday, the holidays can be a tough time to find huge sales (retailers like to wait until after Christmas to really start marking things down), but there are still ways to potentially reduce your expenditures.

You can start by searching for coupons and discount codes online. Sign up for your favorite store’s loyalty program to cash in on potential discounts. You can also follow your favorite brand ambassadors on Instagram—they might post promo codes that you can take advantage of that aren’t widely circulated.

Getting Creative with Gifts

If there’s no way you’ll stay under your budget, consider proposing a Secret Santa gift exchange with your coworkers or family to limit the number of gifts you have to buy. You can also look into presents that require less money—though they may require more time.

For example, you could whip up an elaborate home-cooked dinner, do the laundry and ironing for a month, or even tackle a dreaded home improvement project.

Thinking Outside the Box with Your Credit Options

If there is absolutely no way you can trim your holiday spending, consider all your options before charging up a credit card. While credit cards might seem like the easiest way to make sure everyone on your list has a happy holiday, high interest rates (on some) mean that you could end up spending 17%, 20%—even over 25% more on your gifts than you intended.

Many department stores and retailers offer layaway programs for bigger purchases. Typically, they require a certain amount of money down and a fee. Some retailers may waive the initial fee.

It’s important to note that many layaway programs require payment in full in 45 to 90 days , and offer their programs only in-store. They also typically require cash payments, rather than credit card payments. However, since you’ll be avoiding pesky credit card interest rates that can typically run anywhere from 3% to over 25%, it could be cheaper in the long run to use layaway than it would be to put your big purchase on a card.

If you must use a credit card, you could look into rewards cards that offer extra points on purchases from certain retailers, or a travel card with a generous sign-up bonus. That way, your holiday spending could get you a free or discounted flight in the next year. Look for a 0% interest card that won’t charge you interest for a certain amount of time (hopefully for a few months after the holidays), otherwise a rewards card could end up costing you way more than the free dough.

Considering a Personal Loan to Pay Off High-Interest Christmas Debt

If you’ve already done the damage and charged way too much on your card, or cards, consider using a personal loan to pay off credit card debt. A small personal loan offers you the ability to pay off your holiday debt with a lower interest rate. Use SoFi’s personal loan calculator to see if it’s the right decision for you.

Loaded with holiday debt and high interest rates? A personal loan with SoFi can help.

Learn More


The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit.
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