14 Ways To Pay Off Holiday Debt And Save On Interests


A study carried out by the New York-based Union Bank revealed that two-third of consumers create special lists for their holiday shopping and other expenses. But at least 33% of their respondents have affirmed that nothing less than 25 weeks is usually required to clear off the debts incurred during the holidays.

30% of these people say that they spend more on impressing their family members and friends. Shopping is a whole lot to individuals during holidays.

The National Retail Federation’s annual survey shows that an estimated $1,047.83 is expended in physical and online stores in 2018. A trade company in Washington projects that shoppers likely spend between $727.9 and $730.7 billion during the holiday season that runs from 1st November to 31st December.

It is often better to plan your holidays. You can decide how much you need to put aside ahead of the holidays in the coming year. Open separate savings accounts with specific pay periods, and divide them on how they will be deposited in your savings account.


These 14 tips will help you pay all your debts as fast as possible.


1. Quit spending

The more you continue to embark on frivolous spending, the more your debts continue to accumulate. And when your debt is not settled in time, you dig deeper into it by continuing on a spending spree. You may want to satisfy everyone’s holiday wish, but it is quite an expensive risk.

Change your spending attitude instead. Cut out credit spending, especially ones with high interests. Keep off spending through the use of credit cards. 

“This will shed light on how easily we spend on impulse, but also proves how much easier it would be to decrease our debt while also saving.” Chris Osmond, chief investment officer at Prime Capital Investment Advisors in Overland Park, Kansas said.


2. Enumerate your debts

“Only when you know all the debt you have and see it in front of you, can you develop the most effective repayment strategy,” said Greg McBride, CFA, a chief financial analyst for Bankrate, a New York-based financial data company.

He added that every strategy that is geared at repaying debts must begin with outlining the outstanding debts in a list. Show how much is required per month, the interest rates, and notes that may indicate a possible future change in the interest rates.


3. Do your budgeting

It is very important to create a budget that shows the actual amount that goes into certain discretionary spending like eating out. Curate all the required data to do realistic budgeting, track and analyze all your spending. You can consider technology, tools, and apps to help you do an effective one while also planning on your repayment strategy.

“How often do you shop, or dine out, or go to the movies?” Chris Osmond said. “Make note of your biggest expenses that are not needed, but wants and how much of those purchases could be applied to debt or saved.”

To control how your money goes out, map out areas you can cut down on your expenses. For instance, you can shop at stores where you’ll enjoy cheaper discounts to save on groceries, consider a more basic mobile phone plan, go for a more basic cable package, and reduce eating out.

“Most importantly, hold off on all large purchases until you have your debt paid down and money saved up,” said Troy Frerichs, a vice president of investment services at Country Financial, a Bloomington, Illinois-based financial services company.


4. Consider the Avalanche method

Debt repayment has two major approaches to having them achieved: the snowball method and the avalanche method.

We recommend the avalanche approach which involves prioritizing repayment from the ones with the highest interest rates to the ones with the lowest.

When you stick strictly to this pattern, your debts will be paid off faster than with the least interest amount. But then, you can go for whatever works for you. The best approach has to do with your temperament.


5. Acquire a credit card with reduced interest rates

There are credit cards with a 0% interest rate, but very few consumers can qualify for this. This is primarily because of credit scores. However, if you have low credit scores, you can still enjoy cards that offer less than 10% interest rates.

“Aside from limited-time 0% promotions, some of the lowest ongoing rates are offered by financial institutions with military ties,” said Ted Rossman, an analyst for CreditCards.com, an Austin, Texas-based financial data company.

The USAA Rate Advantage Visa Platinum Card has rates that start at 8.40%. The PenFed Gold Visa card can be accessible by every American, and the rate is just 8.24%. The Navy Federal Platinum card charges are much lower, at 7.49%. Civilian DoD employees, present service members, family members, and veterans are open to membership of this institution.

There are also credit unions aside from the military-focused institutions stated, that make available credit cards at low rates. One popular example to consider is the Lake Michigan Credit Union Prime Platinum Visa with 7.75% rates. If you’d rather go for credit cards with low rates, you can look out for other credit unions close to you.


6. Speak to your credit card issuer

“You’ll need to have a decent credit score and a record of timely payments to have a chance at a better rate, so check your credit score beforehand to see where you stand. There is no guarantee that you will get a better rate, but you never know if you don’t ask,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling, a non-profit organization that is based in Washington, D.C.

Speaking with a credit card issuer can make open low rates that you never thought could be offered. “That can make a big difference and save you a lot of money in the long run,” McClary said. 


7. Consider communicating with a credit counselor

The National Foundation for Credit Counseling spokesman added that a credit counselor can be helpful if holiday debt issues get out of hand. Aside from your holiday debts, they can also help to manage other financial issues such as housing loans and student loan debts.

“Since saving is an effective way to avoid debt, a credit counselor can also help you find the best strategy for having a bigger cash reserve to use during the holidays next year,” he concludes.


8. Merge your debts

Bruce McClary advises combining your holiday debt with a lower rate account as a way of saving on interest. You may be able to move outstanding debts to an Account with a much lower interest rate or no-interest introductory offer.

“Just be sure to pay off the transferred balances before the reduced rate offer expires to save the most money. Also, it helps to avoid placing any new charges on the accounts that were paid off by the balance transfer.” McClary said.


9. Look for promotional 0% interest rate credit card for new purchases

You can receive no-interest rate credit cards from card issuers on promotions for a specified period. But be sure you can pay off within 12 to 18 months, as failure to do so, we throw the interest rates off the bar. Rates may jump to double figures once the promotional period elapses.

“There are cards on the market that spare you interest payments for a year or more, which is helpful if you plan to buy some big-ticket items,” said Sara Rathner, a credit cards expert at NerdWallet, a San Francisco-based financial products and services company. 


10. Start a side hustle

You can avoid getting into deep credit card rates by starting a part-time job. There are lots of offline and online jobs that will offer you flexible hours. You can engage in snow removal, babysit, freelance writing, or driving for a car sharing company.

 “Signing up to be a walker or sitter on the Rover platform is an excellent way to make extra money during the holiday season,” said Jenna White, general manager of boarding and daycare Services at Rover.com, a Seattle-based pet sitting services company.

White went on to add that part-time jobs will offer you the flexibility of deciding your preferred service to provide, how much you can earn, and the convenient time to offer the service.


11. Get a Balance Transfer Card

A good debt payoff tip is to sign up for a balance transfer credit card. The odds are pretty good that consumers can qualify for one — we generally see credit scores of 670 or higher required by credit card issuers and the average nationwide is 705, said Ted Rossman, an analyst for CreditCards.com, an Austin, Texas-based financial data company.

“You can pay no interest for as long as 21 months on the Citi Simplicity card. It charges a 5% upfront transfer fee, which might be worth it. If you want to avoid the fee, you could opt for 15 months with no interest and no transfer fees on the Chase Slate, Amex Everyday, or BankAmericard,” he said.

“Depending on how much you owe, a balance transfer could save you hundreds or maybe even thousands of dollars,” Rossman said. “Unfortunately, not enough people know about balance transfers. A CreditCards.com survey found just 51% of U.S. adults are aware of this concept.”


12. Avoid Retailers’ Credit Cards

You’ll be offered juicy opportunities from opening a retail credit account when you go shopping. But McClary advises staying clear of such temptation of being landed multiple accounts at a time.

“Not only can thurtt on your credit score, but you might also find yourself with more accounts than you can manage,” he said. 

McClary also explained that if you want to open a retail account, perhaps to take advantage of introductory 0% repayment interest rates and discounts, it is better to choose the one that will save you more cost while not ditching you at the brink of falling into further debt that may become more difficult to pay.


13. Set Up Auto Payments

Use auto payments to automate your repayment process without defaulting. Especially, if you receive another credit card such as a 0% balance transfer.

Vice president and wealth Advisor at EP Wealth Advisors in Lafayette, California, Stephanie Richman, advises budgeting those payments into your payments each month while also upholding habits such as eating out less or going to the movies less often which can help to ease loan repayment.

“Cook in or watch some holiday cheer on your favorite streaming media.” He said.


14. Consider harnessing next year’s tax refund

If you are typically opportuned for a huge tax refund from the IRS, then you can consider paying off your holiday debt from the refund you get. You must not make this a yearly strategy of settling your holiday debts. It is safer to plan for your spending rather than rely on your tax refund to repay your holiday debts.

Chief economist at LendingTree, a Charlotte, N.C. lending marketplace, Tendayi Kapfidze reveals that “Tax refunds are mostly issued in February at 44% of total refunds in 2019. By the end of March, 65% of refunds had been paid out. The average refund of $2,873 by March 29, 2019 ,compared quite favorably with our estimate of $1,230 in holiday debt that the average consumer added last year.”



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