5 ways to tackle your credit card debt before the holidays

Credit card debt hit a new record high in the third quarter of 2024. As Americans continued to rack up the charges on their credit cards, combined balances reached $1.17 trillion nationwide. 

With an average credit card interest rate of over 23% and balances climbing, it’s clear from these numbers alone that many Americans are drowning in debt — even before looking at troubling data showing a 9.1% delinquency rate.  

While debt relief may already be in high demand in light of these big credit card bills, the reality is that things may get worse instead of better for some. Americans plan to spend an estimated $1,638 on holiday expenses this year, which could make coping with expensive credit card debt even more challenging. Luckily, there are some ways you can start dealing with your lingering credit card debt issues now.

Find out more about your debt relief options here.

How to tackle your credit card debt before the holidays 

If you don’t want to head into the holidays burdened by a high credit card balance, the tips below could help you deal with your debt before the festive season arrives. 

1. Create a budget to stop the spending and prioritize debt payoff

If you want to improve your finances by dealing with debt before the holidays, you’ll need a roadmap to get you there. 

“The best way to tackle credit card debt before the holidays is to create a focused plan to reduce your balance and avoid adding new debt,” says Douglas A. Boneparth, CFP, financial advisor and president of Bone Fide Wealth, LLC. “Start by reviewing your finances to see where you can cut non-essential expenses temporarily, directing those savings toward your credit card balance.”

Jeffrey Wood, CPA, CFP and partner at Elysium Financial, believes making a budget is the best way to limit spending, divert more money to debt payoff, and avoid digging a deeper hole  

“First, make sure you have a proper working budget to avoid perpetuating or worsening the debt problem you’re currently in,” Wood says. “A bucket without holes is easier to fill.” 

When you make your budget, extra credit card payments should be a must-pay expense within it. 

“Absolutely pay more than the minimum payment,” says Rick Miller, financial planner and investment advisor at Miller Investment Management. These extra payments will both bring your balance down more quickly and reduce the interest you pay over time, Miller says.  

If you have trouble sticking to your spending limits, Miller and other experts advise changing the way you pay for purchases — at least temporarily — so you’re less likely to go overboard. 

“Pay for things with cash as much as possible to avoid increasing credit card balances,” says David Peters, CPA, founder and owner of Peters Tax Preparation & Consulting. 

If you switch to cash, you can’t spend more than you have — and all the extra you’re saving by keeping costs in check can help you bring your balance down to $0 before ringing in the new year. 

Learn how to start tackling your high-rate credit card debt today.

2. Generate some extra income

If you need extra help with debt payoff before the holidays, boosting your income to make extra payments could be just as beneficial as cutting spending. 

“Step one is to determine where the money will come from,” says Curt Scott, president and investment advisor representative at Scott Financial Group. 

Scott suggests that if your credit card debt results from a tight budget, you may want to work overtime or sell something to generate extra income to pay down your balance. 

While there’s a limit to the amount of spending you can reduce, you likely have much more capacity to increase earnings through some additional effort on your part. All the extra funds you earn can go directly towards debt paydown.

3. Adopt the right debt payoff approach

When it comes to debt relief dos and don’ts, it’s very clear that making extra payments must be on your to-do list. However, you’ll need to decide how to allocate them. 

“First you need to ensure you’re making at least the minimum monthly payment on each debt,” says Keith Spencer, CFP and founder and financial planner at Spencer Financial Planning. Spencer explained that once you’ve done that, you can start sending extra money to the rest of your credit cards — but you’ll need to be smart about where those extra payments go first. 

“There are a couple of tried-and-true methods of conquering debt called the snowball and avalanche methods,” Wood says. “In the snowball method, an individual focuses on paying off the smallest balances first. In the avalanche method, the focus is on the highest interest rate debt first to maximize interest expenses.”

The best option for you generally depends on whether you need extra incentive to keep going or want to save as much interest as possible. 

“The avalanche method is most effective for reducing the total amount of interest paid, while the snowball method uses small, quick victories to build and maintain motivation,” Scott says.

While there are differences between them, there is one common feature of both methods. 

“When one debt is paid off, the entire balance used to make those payments is transferred to the next debt in line,”  Woods says. 

This means you’ll have a larger amount of money to make payments on each subsequent debt, which will reduce your balances first. 

4. Take advantage of balance transfer cards

High credit card interest rates are one factor that makes debt paydown so difficult, but there’s a possible solution to this problem 

“Consider transferring your balance to a card with a 0% introductory APR,” Boneparth suggests. 

These cards are called balance transfer cards, and “balance transfers can help save you some money on interest,” Peters says. 

However, both Peters and Wood caution that there are usually fees associated with transferring a balance that should be taken into account. 

It’s also critical to remember that the low rate is temporary and usually lasts for only around 12 to 21 months. 

“Make a note on your calendar telling you when the promotional period is up,” Peters suggests. “Plan to pay off the debt by then, so you don’t go back to paying high interest rates again.”

Wood also warned that you can’t confuse transferring a balance as making real progress, as all you’re doing is moving debt around. Although the balance transfer card will put you in a better position to pay off debt, you’ll still have to be diligent to avoid digging a deeper hole. 

“It’s very important not to open new debts or still have an underlying spending problem that may make debt balances even higher when all is said and done,” Wood says. 

5. Consider debt consolidation

You can also consider debt consolidation as another option for tackling your debt before the start of the holiday season.  Debt consolidation involves getting a new loan and using it to pay off multiple existing debts.

“The first thing I would look at is to see whether you can consolidate debt to a lower interest rate,” says Spencer. The savings from debt consolidation can be substantial if you can take a credit card charging upwards of 20.00% interest and qualify for a loan to pay off that debt that charges you around 10.00% or less. 

There are debt relief companies that can help you consolidate debt and determine if debt relief is worth it. You can also shop around for personal loans or look into other options for borrowing at a more affordable rate. 

“If you have access to a home equity line of credit, that would be another source of debt repayment cash with much lower interest rates,” says Miller. 

The bottom line

Finally, once you’ve made progress toward your debt payoff, it’s important not to blow it. “The most important thing going into the holiday season with credit card debt is just to make sure you don’t increase that debt,” says Elizabeth Pennington, CFP and financial planner at Fearless Finance. 

How can you avoid that when there’s so much pressure to spend? “Try to limit holiday spending to cash or a debit card to avoid new charges on your credit card, making it easier to stay on track and enter the new year with a lighter financial load,” Boneparth says. 

Domenick D’Andrea, AIF, CRC, CPFA and founder of DanDarah Wealth Management, also suggests saving a “predetermined amount of money weekly,” towards your holiday spending so you don’t have to charge your purchases. “It’s a great way to help with budgeting and to help lower credit card usage,” he says.  

While Spencer notes that using cards for holiday purchases has some benefits, including better fraud protection and the potential to earn rewards, you still ultimately need to know yourself and whether you can be responsible. 

“If you struggle with debt, then rather than trying to benefit from using credit cards, it would be better to stay away from them completely after paying them down,” Spencer says. “If you struggle with holiday spending and budgeting, this may be the best approach.