36% of Americans took on holiday debt this year, a survey found. Check out somee tips on how to handle it!
This holiday season, over a third (36%) of Americans took on new debt, according to a LendingTree survey. On average, these consumers took a $1,181 debt, an increase from $1,028 in 2023.
Interestingly, only 44% of those who accumulated debt anticipated it, reflecting the financial struggles that many have faced this holiday season, according to Matt Schulz, LendingTree’s chief credit analyst.
“Some of it is people just wanting to wrap up what’s been a difficult year by spreading a little joy, and maybe they ended up taking on a little bit of extra debt to do so”, Schulz said.
Certain groups were more likely to take on debt, according to the survey:
- Parents of young children: 48%
- Millennials (ages 28-43): 42%
- Those who earn $30,000-$49,999: 39%
The risk with holiday debt is that it can linger well into the next year. A study by WalletHub found that nearly half of Americans still have balances from the previous holiday season. Amid financial struggles, paying off debt remains a top financial goal for 2025, according to a Bankrate survey.
Negotiate The Interest Rates
The LendingTree study found that 42% of those who took on debt this holiday said they’re facing interest rates of 20% or more on credit cards or store cards. So, if you’re carrying holiday debt, you’re likely going to be paying high rates as well. However, according to Schulz, you can potentially reduce these rates by exploring options like:
- 0% Balance Transfer Credit Cards: these cards allow you to transfer your balance and pay no interest for 12 to 15 months.
- Debt Consolidation Loans: these can offer lower fixed interest rates, making payments more manageable.
Choose a Debt Payoff Strategy
When paying off debt, pick a strategy that aligns with your financial situation and motivation. Two popular methods are:
- Avalanche Method: focus on paying off high-interest debts first to save the most on interest.
- Snowball Method: start with the smallest balances to gain quick wins and build momentum.
Some prefer the Avalanche Method because it helps lowering the total cost, but others choose the Snowball Method as a way to stay motivated due to the fact that you can see the progress by eliminating the number of debts faster.
“What really matters more is finding the one that works best for you and that will keep you motivated”, Schulz advised.
Increase Your Savings
While paying down debt should be a priority, it’s equally important to save for emergencies. A small cushion of savings can help you avoid relying on credit cards for unexpected expenses or even during next year’s holiday spending.
However, prioritizing debt repayment might be wiser since credit card interest rates often exceed 20%, while savings account rates typically max out at around 5%, advised Laura Mattia, a certified financial planner and senior vice president at Wealth Enhancement Group in Sarasota, Florida.
Don’t Be Too Hard On Yourself
If you overspent during the holidays, don’t be too hard on yourself, suggested Jesse Sell, a certified financial planner. As you chip away at your debt, break your progress into smaller goals and celebrate milestones along the way. Even small rewards can help you stay motivated.
“It’s not terribly uncommon to kind of let otherwise good discipline go for a few weeks over the holidays. It’s common to relax financial discipline a bit during the holidays. Try to find ways to take some positives out of it and keep the momentum and focus going”, Sell said.