Charging your holiday gift list to a credit card can pay off in more ways than one. Not only can you earn rewards for spending and secure important protections on items you buy, but you can score 0% APR on purchases for anywhere from 12 to 21 months.
But, there are downsides that come with paying for the holidays with plastic, too. One of those is the potential for holiday debt that lingers far beyond any intro 0% APR offers you have access to.
According to a new study commissioned by Achieve and conducted by Talker Research, having debt live far beyond the holidays may be more common than people realize. The study showed that 20% of respondents planned to charge their holiday gifts to a credit card, and that nearly one in five (17%) expect to have holiday debt that lasts well into 2025. Further, 37% of respondents polled said they racked up holiday debt in years past.
If you have debt leftover from the holidays this year, your best bet is to tackle it quickly — or at least pay off as much as you can — before your card’s intro APR offer ends. The following steps can help you do exactly that, but only if you start now.
Step 1: Tally up the total you owe
First off, figure out the total you owe across all credit cards you used for holiday shopping and other expenses. If you used one specific card with 0% APR for all your holiday shopping and bills, this part should be easy.
Let’s say you signed up for a cash-back credit card that came with 0% APR on purchases for 15 months, and that you used it to charge $1,500 in holiday gifts and expenses. In this case, this will be the debt you want to focus on.
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If you have other debts on cards that don’t have an intro APR offer, you may also want to look into balance transfer credit cards that let you consolidate and pay down debt at 0% APR for a limited time. You’ll pay a balance transfer fee to access these offers, but they can help you avoid interest completely for up to 21 months.
Step 2: Determine your 0% timeline
You’ll also need to know how long you have left at 0% APR. This timeline typically starts when you initially sign up for a credit card, and it can last anywhere from 12 to 21 months depending on the card.
If you signed up for a card that offers 15 months at 0% APR in September of 2024, for example, you may have until November of 2025 to spend interest free.
Step 3: Do some basic math
Once you know your debt amount and how long you have left at 0% APR, some basic math can help you figure out how much you need to pay each month to become debt-free before the intro period ends. The formula for your new monthly payment is as follows:
Debt amount owed / months left at 0% APR = new monthly payment
If you owe $1,500 on a card that has 12 months left at 0% APR for example, you would need to pay $125 per month to get out of debt over that timeline.
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If the monthly payment on your Christmas debt is more than you can afford, take a closer look at your monthly expenses and bills to see if you can find areas to cut. For example, you could cut back on discretionary spending for a while, including dining out or extra subscription services. If you find expenses you can cut, you can funnel those funds toward your debt payments. If you still can’t afford to pay the required payment using the formula above, figure out how much you can afford to pay and go with that figure instead. Paying as much as you can can help you maximize interest savings as you pay down debt faster, even if you can’t become entirely debt-free before your card’s intro offer ends.
Step 4: Follow the plan
Next up, you’ll want to pay the monthly payment on your debt on time each month. Making on-time payments on your debt can help you build credit history in the short-term, and all while chipping away at the total amount you owe.
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While you’re in debt payoff mode, stop using credit cards for new purchases. Obviously, using plastic for spending and bills while you’re trying to pay off debt will slow down your progress significantly.
Step 5: Pay extra if you can
If you have extra funds to throw toward debt while you work toward paying it off, you should absolutely do so. Paying extra can help lower your balances more with each passing month, thus helping you eliminate holiday credit card debt at a faster rate.
You could even cut a few months of payments off your holiday debt payoff plan if you make enough extra payments throughout the process.
The bottom line on paying off holiday debt
Racking up Christmas debt can be an absolute breeze, and you may not even worry at the time if you have a credit card with 0% APR. However, the bill for those purchases will always come due, and the variable interest rates credit cards charge will eventually get added to your payment each month.
That’s why your best bet is paying off as much holiday credit card debt as you can while you still have 0% APR. Doing so can help you reduce or eliminate your debt before interest is charged, thus saving you money along the way.
