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Still paying off last year’s holiday debt? Here’s what to do now.
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The holidays are a time of giving, but for many, they also come with additional financial strain. This year, holiday spending is expected to increase to an average of $1,638 per shopper, according to the results of PWC’s Holiday Outlook survey — an increase of 7% compared to 2023 and 15% compared to 2022. And, chances are that at least some shoppers will be relying on credit cards to cover some or all of that spending.
Using your credit cards to cover your holiday spending can be a risky route to take given that today’s average credit card interest rates are sitting at a record high of over 23%. At that rate, any balance you carry from one month to the next can balloon out of control quickly. But any holiday spending you do in the coming weeks can become even more problematic if you haven’t paid off last year’s holiday credit card debt yet. The interest charges alone can make it tough to get rid of your balance, especially if you’re adding to it with more holiday spending this year.
The good news? You don’t have to let last year’s credit card debt continue to derail your financial goals. There are several proven methods you can use to reduce interest costs and accelerate your credit card debt payoff instead. And, with strategic planning and the right tools, you can expedite the credit card debt repayment process and reclaim your financial peace of mind.
Find out what the best debt relief strategies are for you now.
How to pay off last year’s holiday debt
If you’re struggling to get rid of last year’s holiday debt right now, the strategies outlined below can help you tackle those lingering balances.
Transfer your balances to a card with a 0% APR offer
One of the most effective ways to tackle holiday credit card debt is through a balance transfer credit card. These cards typically offer 0% APR introductory periods lasting anywhere from 12 to 21 months, providing valuable time to pay down your debt without accruing additional interest. While most balance transfers involve a fee of 3% to 5% of the transferred amount, the savings in interest charges often far outweigh this cost.
Keep in mind, though, that these offers typically require good to excellent credit for approval. It’s also important to create a payment plan that ensures you’ll clear the balance before the promotional period ends. But if you can come up with the right plan and qualify for the right balance transfer offer, this strategy could pay off in multiple ways.
Start getting rid of your credit card debt today.
Consolidate your debt with a lower-rate loan
For those juggling multiple credit card debts from last holiday season, a debt consolidation loan can simplify repayment and lower your overall costs. With debt consolidation, you’re typically able to combine multiple credit card balances into a single loan, which typically comes with a much lower rate than you have on your credit cards.
Because most debt consolidation loans often have lower rates than credit cards, this approach can save you money and reduce your repayment timeline. And unlike credit cards with variable rates, a debt consolidation loan’s rate remains stable throughout the repayment period, providing peace of mind and consistency in your debt repayment journey.
Explore what debt management plans can offer
If you’re struggling to make progress on your debt due to high interest rates or financial hardship, a debt management plan might be the solution. Offered by credit counseling agencies, these plans work to consolidate your debts into a single monthly payment. The agency also negotiates with your creditors to lower your interest rates or waive certain fees, making it easier to pay off your balances.
While these plans typically require a small monthly fee, the savings in interest can be substantial. The structured repayment plan can also help you stay on track, which could come in handy in terms of expediting the process.
Take the debt snowball or avalanche approach
The debt snowball method offers a psychological boost to debt repayment by focusing on quick wins. This approach involves listing all holiday-related credit card debts from smallest to largest balance, regardless of interest rates. You maintain minimum payments on all cards but direct any extra money toward the smallest balance until it’s paid off. You then roll that payment into tackling the next smallest debt. This strategy builds momentum through visible progress, helping you stay motivated.
The debt avalanche method, on the other hand, takes a more mathematical approach. Similar to the snowball method in structure, this strategy prioritizes debts by interest rate rather than balance. By targeting the highest-rate debt first while maintaining minimum payments on others, you’ll save the most money in interest charges over time. While this approach may take longer to see visible progress, it provides the greatest financial benefit in the long run.
The bottom line
Holiday debt can feel overwhelming, but it doesn’t have to be a permanent fixture in your financial life. By adopting a focused repayment strategy, exploring tools like debt consolidation or balance transfers and making small sacrifices in your budget, you can significantly accelerate your debt payoff journey. The sooner you eliminate last year’s holiday balances, the sooner you’ll free up funds for your future financial goals — and maybe even enjoy a debt-free holiday season this year.
With President-elect Donald Trump vowing to pull the plug on the $7,500 tax credit for buyers of electric vehicles, one EV maker and its billionaire owner are fully behind the idea and even stand to profit from it.
“Take away the subsidies, it will only help Tesla,” Tesla owner Elon Musk posted in July on X, the social media platform he owns.
The credit granted to buyers of EVs helped make the case for buying the climate-friendlier vehicles, and when an earlier version of the tax credit was done away with several years ago, Tesla cut prices on its cars by about half of the credit its buyers were no longer receiving.
Tesla is the sole automaker to be generating a profit on its U.S. sales. Manufacturing EVs is a losing proposition for Big Three vehicle makers like Ford and General Motors, who sell a fraction of EVs compared with Tesla.
Once the EV tax credit is vanquished, the price of EVs overall might drop, cutting into Tesla’s profits, as opposed to increasing the company’s red ink as it could for legacy automakers still working to get a firmer footing in the EV market. Should traditional automakers scale back on their EV production and sales to curtail the losses, EV shoppers would have even fewer options, benefiting Tesla.
As Musk touted his support for axing the EV tax credit, Tesla’s auto industry rivals signaled the opposite.
The Alliance for Automotive Innovation urged that the tax credit continue, telling lawmakers in an October letter that U.S. manufacturers count on it as they vie with Chinese EV production. Around the world, vehicle makers have poured billions into transitioning to electric cars.
Further, the Zero Emission Transportation Association on Friday called on Trump to reconsider, saying the tax credit has bolstered employment in states that voted Republican, including Ohio, Kentucky, Michigan and Georgia.
“If the United States is going to continue to fight to bring those jobs here and actually compete to win against China, there needs to be a demand signal — like the New Clean Vehicle Tax Credit — aligned with that goal, otherwise we would be undercutting those investments and hurting American job growth,” ZETA Executive Director Albert Gore stated on Friday.
“The potential elimination of the federal tax credit for electric vehicles by the Trump administration — without another form of incentive to replace it — could derail the trajectory of EV sales in the United States,” offered Edmunds analysts.
Trump repeatedly vowed to eliminate what he labeled President Joe Biden’s “EV mandate” as he campaigned for the White House.
While there is no such mandate in federal law, the Inflation Reduction Act passed during President Biden’s term revived the credit for many EV purchases, while also granting low interest loans to manufacturers constructing EV and battery plants.
Trump’s transition team intends to knock out the credit as part of a broader tax-reform measure, according to a Thursday report by Reuters, which cited two sources with direct knowledge of the matter.
The president-elect during his first term attempted to repeal the EV tax credit, which was expanded by President Biden in 2022.
Analysts who track Tesla concurred with Musk’s view that the credit’s demise would only help his company.
“This is a clear negative for the EV industry at first look and would particularly hurt GM, Ford, Stellantis and Rivian,” wrote Wedbush Securities tech analyst Daniel Ives. Conversely, “this will enable Tesla to further fend off competition from Detroit as pricing/scale/scope is an apples-to-oranges when compared to the rest of the auto industry once the EV tax credit disappears.”
Americans looking to buy an electric car should do so sooner rather than later, advised Ivan Drury, Edmunds’ director Insights.
“The federal tax credit combined with slashed prices due to slowed sales momentum has contributed to electric vehicles becoming labeled as some of the best deals on the market in 2024. Now, with production cuts shrinking supply and a fresh wave of demand from those seeking a deal while they still can, it can be all but assured that the price for that EV you’ve been eyeing is going up in the coming months,” Drury stated.
With President-elect Donald Trump vowing to pull the plug on the $7,500 tax credit for buyers of electric vehicles, one EV maker and its billionaire owner are fully behind the idea and even stand to profit from it.
“Take away the subsidies, it will only help Tesla,” Tesla owner Elon Musk posted in July on X, the social media platform he owns.
The credit granted to buyers of EVs helped make the case for buying the climate-friendlier vehicles, and when an earlier version of the tax credit was done away with several years ago, Tesla cut prices on its cars by about half of the credit its buyers were no longer receiving.
Tesla is the sole automaker to be generating a profit on its U.S. sales. Manufacturing EVs is a losing proposition for Big Three vehicle makers like Ford and General Motors, who sell a fraction of EVs compared with Tesla.
Once the EV tax credit is vanquished, the price of EVs overall might drop, cutting into Tesla’s profits, as opposed to increasing the company’s red ink as it could for legacy automakers still working to get a firmer footing in the EV market. Should traditional automakers scale back on their EV production and sales to curtail the losses, EV shoppers would have even fewer options, benefiting Tesla.
As Musk touted his support for axing the EV tax credit, Tesla’s auto industry rivals signaled the opposite.
The Alliance for Automotive Innovation urged that the tax credit continue, telling lawmakers in an October letter that U.S. manufacturers count on it as they vie with Chinese EV production. Around the world, vehicle makers have poured billions into transitioning to electric cars.
Further, the Zero Emission Transportation Association on Friday called on Trump to reconsider, saying the tax credit has bolstered employment in states that voted Republican, including Ohio, Kentucky, Michigan and Georgia.
“If the United States is going to continue to fight to bring those jobs here and actually compete to win against China, there needs to be a demand signal — like the New Clean Vehicle Tax Credit — aligned with that goal, otherwise we would be undercutting those investments and hurting American job growth,” ZETA Executive Director Albert Gore stated on Friday.
“The potential elimination of the federal tax credit for electric vehicles by the Trump administration — without another form of incentive to replace it — could derail the trajectory of EV sales in the United States,” offered Edmunds analysts.
Trump repeatedly vowed to eliminate what he labeled President Joe Biden’s “EV mandate” as he campaigned for the White House.
While there is no such mandate in federal law, the Inflation Reduction Act passed during President Biden’s term revived the credit for many EV purchases, while also granting low interest loans to manufacturers constructing EV and battery plants.
Trump’s transition team intends to knock out the credit as part of a broader tax-reform measure, according to a Thursday report by Reuters, which cited two sources with direct knowledge of the matter.
The president-elect during his first term attempted to repeal the EV tax credit, which was expanded by President Biden in 2022.
Analysts who track Tesla concurred with Musk’s view that the credit’s demise would only help his company.
“This is a clear negative for the EV industry at first look and would particularly hurt GM, Ford, Stellantis and Rivian,” wrote Wedbush Securities tech analyst Daniel Ives. Conversely, “this will enable Tesla to further fend off competition from Detroit as pricing/scale/scope is an apples-to-oranges when compared to the rest of the auto industry once the EV tax credit disappears.”
Americans looking to buy an electric car should do so sooner rather than later, advised Ivan Drury, Edmunds’ director Insights.
“The federal tax credit combined with slashed prices due to slowed sales momentum has contributed to electric vehicles becoming labeled as some of the best deals on the market in 2024. Now, with production cuts shrinking supply and a fresh wave of demand from those seeking a deal while they still can, it can be all but assured that the price for that EV you’ve been eyeing is going up in the coming months,” Drury stated.
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