Copyright CBS News
The holidays can be a wallet-busting time of year for many Americans. In fact, in 2024 alone, U.S. shoppers spent over $955 billion during the holiday season, the most ever recorded, according to the National Retail Federation. Much of that spend likely went on credit cards. And when you throw in inflation and the higher prices consumers have faced in recent years, credit card balances have gotten out of hand for many. In total, Americans now have more than $1.21 trillion in outstanding credit card debt, the latest data shows. "Even though inflation has cooled, prices for a lot of the things we buy are still elevated, and interest rates, while also cooling, remain high enough that they are putting pressure on people's finances," says Bobbi Rebell, a certified financial planner and founder of Financial Wellness Strategies. "Wages aren't going up enough to cover the difference." Are you struggling with high credit card debt? With credit card rates sitting at over 21% or higher on average, paying off those balances is critical, especially before the pressure of holiday spending mounts. Find out how you can start tackling your high-rate credit card debt now. What are the best ways to cut credit card debt before the holidays? Here's how experts say you can cut your credit card debt down before the holidays. Avoid adding more Your first step should be to stop putting charges on your credit card or, as Rebell puts it, "stop the bleeding." "Put the cards away and spend a lot less," Rebell says. "And when you do spend, use cash or a debit card." You don't need to cut up your cards, but put them out of sight for a while. Focus on relying only on the money you already have until you can get your balances in check. "Do not use your credit card until you have the existing balance paid off," says Cynthia Campos Deglado, founder and financial advisor at Campos Wealth Management. "When you do charge, be sure you can pay it off in full before the next cycle. If you can't, stick to buying only what you have the cash for, especially if you have not established a savings account." Explore your debt relief options and find a path out of high-rate debt today. Get on a budget and have a repayment plan From there, it's time to set a budget and determine how you can start paying down your debts efficiently and effectively. "If you're struggling with credit card debt, you must budget," Delgado says. "This will help you stick to spending only what you are allotting yourself for that category or time period." Once you do that, determine what you can afford to put toward your debts each month, and pick a debt payoff method. Two popular ones are the avalanche and the snowball methods. With the avalanche method, you focus on putting the most money toward your highest-interest debt first, making only minimum payments on the rest. Then, when that's paid off, you move on to your next-highest-rate debt, and so on. "You pay the most expensive debt off first, and then work your way down from there," Rebell says. "That's the fastest path and the one that will cost the least financially." With the snowball method, you pay off your lowest-balance debt first and then move to the next-lowest balance debt after that. This one "delivers earlier wins," but "it may be slower and cost a bit more," Rebell says. Consolidate your debts If you have several credit cards you're trying to pay off at once, consolidating them into one loan can sometimes help you to pay them off quicker and with less interest. With this approach, you take out a debt consolidation loan, a personal loan or some other type of loan, like a home equity loan or home equity line of credit (HELOC), if you're a homeowner, and then use that loan to pay off your credit cards. This essentially rolls them into the loan balance and lets you pay the debts off over time using fixed monthly payments. "Consolidation can be a move to consider if you've got multiple cards with high interest rates and you're juggling payments," says Chuck Bowman, retail and business banking division manager at Amegy Bank. "Rolling everything into one loan with a fixed rate and a clear payoff timeline can make life a lot simpler." Most of the time, the rate is much lower than a credit card, too. For example, the average rate on a credit card is over 21% right now. For a 10-year home equity loan, it's slightly over 8%. "Keep in mind that the lower rate is because the loan is secured by the home, so if the payments are not made, your home could be at risk," Rebell says. Consider a balance transfer card A balance transfer card is another option you can explore. These are credit cards that come with a very low or 0% interest rate for a limited amount of time. You transfer your existing credit card balances to them while paying a 3% to 5% balance transfer fee, and then can repay the balance without interest for anywhere from a year to 21 months. "They save you money by avoiding interest being added to the balance on a monthly basis," Delgado says. Just be careful: After your promo period expires, your rate will usually jump considerably, so you'll need a plan to pay off the balance or, if necessary, transfer to a new balance transfer card at that point. "Balance transfer cards can be a fantastic option if you have the means to make the payments while the interest rate remains at the introductory rate," Rebell says. "The biggest con is that if the balance is not paid off at the end of that time, the interest rate will skyrocket." You should also make sure you have your spending in check before you go this route. When you use a balance transfer strategy, you're essentially clearing the slate on your old cards. This can often make it tempting to run up balances again. "Recognize that you did not free up the card," Delgado says. "You still owe the money — you just merely transferred the balance." Negotiate with your credit card issuers If you're really struggling with paying off your cards, you can also call up your credit card companies and try to work something out or enroll in a credit card hardship program. "Many offer hardship programs or temporary interest rate reductions if you're going through a tough time," Bowman says. "It never hurts to ask." You can also ask for things like a lower permanent rate or for the issuer to drop late fees, if they've been applied. "You most definitely should reach out to the credit card companies to ask what options they have and what can be done to reduce your debt," Delgado says. Talk to a pro There are other options you might be able to explore, too, like credit counseling, debt relief or credit card forgiveness, which erases some or even all of your debt under certain circumstances. If you're not sure what the right route is for your credit card debt, talk to a financial professional or debt relief expert. They can help you determine the best path forward. The bottom line The holidays can easily throw even the best financial plans off track — but they don't have to. If you start tackling your credit card debt now, you'll be in a much better position when the next round of spending rolls around. Whether that means cutting back on expenses, consolidating your balances, or seeking professional help, the sooner you act, the less those high interest charges can compound. The bottom line: You don't need to enter another holiday season weighed down by credit card bills. Taking small, consistent steps today — and getting guidance if you need it — can set you up for a debt-free new year and give you more financial freedom to enjoy the moments that really matter.
