TULSA, Okla. — With more than a third of Americans still carrying debt from last year's holiday spending and average holiday shoppers spending just over $1,100 this year — up 15% from two years ago — many consumers are facing a serious "holiday debt hangover."
The good news? Financial experts say there are proven strategies to dig out of post-holiday debt and get back on solid financial ground.
"You want to make sure that you are getting back on top of your budget, making a plan to pay off any debt that was accumulated over the holiday season," said Kimberly Palmer, a personal finance expert at NerdWallet.
Start with organization
Palmer recommends the first step is getting organized. List out the balances of what you owe on credit cards and buy now, pay later purchases to see the full picture of your holiday debt.
Once you know what you owe, it's time to pick a payoff strategy.
"There's two basic methods to choose from," Palmer said. "There's the snowball method, where you're paying off the smallest amount of debt first and building momentum that way. And then there's the avalanche method, where you are paying off the highest interest debt first."
The cost of minimum payments
Making only minimum payments on $1,000 of debt at a common credit card interest rate of 21% takes almost six years to pay off, highlighting why having a strategic approach matters.
Palmer also suggests using AI tools like ChatGPT or Google Gemini to create customized payment plans, but she offers an important caution.
"You do want to be careful not to enter personal information that you wouldn't want shared when you're asking AI for help," Palmer said.
Tools to stay motivated
Using credit payoff calculators can help show how long it will take to dig out of debt and demonstrate how making small changes to payment amounts affect how quickly you can pay it off.
"And that can be very motivating," Palmer said.
The urgency for these strategies is clear. According to a Consolidated Credit survey, 36% of Americans are still carrying debt from 2024 holiday spending season.
An Achieve survey found that 79% of Americans have less than $1,000 set aside for this year's holiday season.
For Oklahoma consumers, the situation may be even more challenging. A CardRates.com study shows Southern households are hit hardest by lingering holiday debt, with 31% still carrying 2024 holiday debt — the region with highest rate in the country.
Additional research from LendingTree shows average holiday debt in 2024 reached $1,181, representing a 15% increase from 2023. Meanwhile, NerdWallet data indicates that 28% of credit card users are still paying off gifts from last year.
The broader economic context adds urgency to these payoff strategies. Americans' credit card debt reached a record $1.23 trillion in the third quarter of 2024, according to SAN.com, while 42% of cardholders pay interest rates of 20% or higher.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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