Americans wrapped up the 2023 holiday season with hefty credit card bills, according to a new LendingTree survey that reveals 36% of consumers accumulated holiday debt averaging $1,181 — up from $1,028 in 2022.
The survey highlighted that parents of young children (48%), millennials aged 28-43 (42%), and those earning $30,000-$49,999 (39%) were most likely to take on holiday debt. More concerning is that less than half of those who incurred debt had planned to do so.
"Higher prices from inflation remain a major challenge for many families," said Matt Schulz, chief credit analyst at LendingTree. "Some people wanted to end a difficult year by spreading joy, even if it meant taking on extra debt."
Tips to Tackle Holiday Debt
Lower Your Interest Rates
With 42% of holiday debt holders paying interest rates of 20% or higher, exploring 0% balance transfer credit cards could provide relief. These typically offer 12-15 months without interest on transferred balances, though transfer fees may apply.
Choose Your Debt Strategy
Two popular approaches include:
- Avalanche method: Tackle high-interest debts first
- Snowball method: Start with smallest balances
Laura Mattia, CFP at Wealth Enhancement Group, recommends starting with smaller balances: "What deters people most is when they feel they're not making progress and give up."
Build Emergency Savings
While focusing on debt repayment, setting aside emergency funds can prevent future credit card reliance. However, balance this against credit card interest rates, which typically exceed savings account returns.
Celebrate Progress
Jesse Sell, managing principal at Prevail Financial Partners, suggests breaking debt goals into smaller milestones and celebrating achievements along the way. "It's not uncommon to let good discipline slip during holidays," Sell notes. "Take positives from your progress to maintain momentum."
The road to becoming debt-free may be challenging, but as Mattia observes, "People love being debt-free. The idea of not owing anybody money is extremely comforting."