
The challenges we’ve all faced in 2020 can’t be overstated. Many are struggling financially and emotionally because of the pandemic. And because most have adjusted their holiday plans to virtual visits instead of long-distance travel, the holidays are feeling quite different this year.
For some, that difference translates into a little extra spending. Maybe you have family members who are really struggling, and you want to brighten up their winter. Or perhaps you want to compensate for the distance with extra presents. Or maybe your family has struggled financially this year, but you don’t want that to translate into a smaller holiday.
Whatever your situation is, you’re not alone. Many American families are facing new challenges this holiday season, and there’s no playbook for how to have a happy holiday during a global health and financial crisis. If your finances have suffered this holiday season, we’re here to help. Here’s how you can prevent holiday debt, and if you’ve accumulated it, here’s how to handle it.
How to Prevent Holiday Debt
If you’re still holiday shopping, it’s not too late to make a couple adjustments and save yourself from a holiday debt hangover. And even if you’re done shopping for the season, next year might go a little smoother if you’re armed with these tips. Here’s what you can do to ease amassing holiday debt.

Use Cards With High Rewards
Take inventory of all your credit cards and try to use the ones with the best rewards. Whether it’s cash back to help you pay off the debt, accumulated rewards for personal purchases, or miles for future travel, knowing your rewards and using them wisely can help you balance the debt you accumulate through holiday spending.
Shop for Deals
This seems like a no-brainer, but it’s worth mentioning. Since most are shopping online this year, it’s worth it to take a little extra time to shop for the best deal and use online coupons and promo codes. Even though the ease of shopping online makes it tempting to buy more stuff, the advantage over shopping in-store is that you truly can be confident you can find the lowest price with a little investigation.
Stick to a Budget
Planning is the key to preventing and handling holiday debt. When you take a look at your overall finances, be honest with yourself about how much money you really have available for holiday spending. Don’t cut into your emergency funds, and don’t overspend by relying on credit cards. Budget and stick to the plan you’ve made.
How to Pay Off Holiday Debt
If you’re already in over your head this holiday season, it isn’t too late. Even if you’re in a tough situation like having maxed out cards with high interest rates, you can get out. It just takes some planning and smart moves at the start. Here’s what to do if you’ve got some holiday debt, big or small.

Keep Track of Spending
To pay off holiday debt, you’ve got to know where the debt is. Make sure you keep track of all your credit cards and all the payment details. What are the minimum monthly payments? Is there an interest-free period you need to be aware of? What are the interest rates for each card?
Pay More Than the Minimum
When you’re ready to start paying off your holiday debt, start with the highest interest card first. Pay more than the monthly payment, if possible, and try to pay off this debt quickly. Remember that the longer high interest debt sits around, unpaid, the more you’ll end up paying in the end.
Create a New Budget in January
While you’re at it, go ahead and create a new monthly budget based on your plans to pay off your holiday debt. Make sure to create a line item for holiday debt. Don’t sacrifice important bills or necessities to make these payments. Instead, cut back on extra spending for a few months in exchange for paying off the debt.
Use Balance Transfer or a Personal Loan
If your interest rates are really high and you feel like your holiday debt is getting you stuck in a hole, you can always consider transferring the balance of the high interest cards to lower interest cards. Ideally, you can transfer your debt to a card with an interest-free period and low balance transfer fees to give yourself more time to pay off the debt. Of course, you’ll need to make sure you can pay off the debt by the time the promotional period ends.
You can also take out a personal loan to pay off your holiday debt if you can find a loan with a better interest rate than your card. This means that the loan will pay your credit card debt in full, and you’ll work on paying off the loan instead. It might seem like a lot of work, but a little of interest can go a long way. And if you pay more than what’s required, you can pay off the debt even faster.
If you find yourself with a holiday debt hangover every year, it might seem like your financial goals are impossible to reach. But with a little support, you can get your finances on track. Our moveUP financial wellness program helps you enhance your money skills and empowers you to reach your goals so you can walk away from next year’s holiday season debt-free.