How to recover from holiday credit card debt

If you're feeling generous this holiday season, you may open your credit card bills in January to find the damage was more than you expected or can easily afford.

If you're uncertain how to pay off holiday credit card debt, you're not alone. A recent survey for Consumer Affairs found that 57% of Americans would be willing to go into debt to make their loved ones happy this holiday season.  

Furthermore, you may worry about your credit score, especially if you plan to buy a house or car soon. And if you can only afford the minimum payment, it may take a while to pay down the balance.

How common is holiday debt?

For many, holiday spending and credit card debt go hand in hand. According to a 2024 Experian^® survey of more than 1,000 consumers, 56% reported feeling stressed about their finances during the holidays, and 63% reported overspending. Being aware of the tendency to overspend during the holidays and preparing for it by setting a budget can help you stay on track and avoid becoming overloaded with debt.

How can you avoid overspending during the holidays?

Holiday debt is common. The best way to avoid excessive holiday spending is to start saving for the next holiday season now.

You may have heard of establishing a savings account for a specific purpose, such as a vacation account or a down payment account, if you're saving up to buy a home. Why not also start a holiday spending account?

Putting money aside each month for holiday spending serves a double purpose: You won't be walloped by a huge expense all at once, and you'll have a clear picture of your holiday budget.

Aim to autosave or set aside a specific amount each week or month. Alternatively, consider setting aside a portion of your tax refund or yearly bonus from work.

People sometimes overspend during the holidays because they haven't determined an appropriate amount to spend on treating their loved ones. Setting and following a budget you can afford can help you be ready for the holiday season with a solid plan.

How many people have credit debt?

According to the Federal Reserve Bank of St. Louis, the average household is carrying $6,000 in credit card debt.

The Federal Reserve Bank of New York reports credit card balances totaled $1.23 trillion in the third quarter of 2025 – a 1.8% increase from the previous quarter.

How to pay off credit card debt

This might be the least exciting part of spending over the holidays, but paying off credit card debt can help reduce stress and put you in a better financial position. It requires you to create a financial plan.

Here are some different tactics you can try for paying off that holiday debt.

Know what you owe

First, you'll need to get your head around how much debt you've accumulated during the holidays. Review your credit card statements to ensure an accurate balance.

Put together a spreadsheet or other document that can help you tally up your totals and identify the cards with the highest interest rates. Those are the accounts you’re going to want to pay off first.

Go on a spending detox

A tried-and-true strategy for getting out of debt is to stop spending until your current balances are paid in full.

Try going on a no-spend challenge. This is when you put a hold on nonessential spending for a week or a month. You can set some rules, such as not spending "new money," but you can tap into gift card credit.

Then you can create a budget and consider the envelope budgeting method, also known as cash stuffing. You can put the funds in cash and divide them among envelopes for your various expenses, such as groceries and entertainment. When the envelope is empty, you're done spending in that category.

This method is surprisingly effective. It can jump-start your efforts to get out of credit card debt as you apply even more of your money to paying down your debt.

Consider debt consolidation

Debt consolidation involves taking out a loan and using the proceeds to pay off existing debts, such as credit card balances. This allows you to replace multiple accounts with their own payment schedules and interest rates with a single loan or credit card. This leaves you with one monthly payment and one interest rate, which can make paying off your debts more affordable.

Common ways to consolidate debt include:

• Taking out a personal loan
• Transferring balances to a low- or no-interest credit card
• Borrowing your home equity with a home equity loan, home equity line of credit (HELOC), or cash-out refinance

While there are numerous advantages to this approach, it is also important to be aware of its downsides. For one, debt consolidation can harm your credit, potentially through hard inquiries on your credit report, reducing the average age of your accounts, and temporarily increasing your credit utilization.

Is a debt consolidation personal loan right for you?

A personal loan for debt consolidation has several advantages over a balance transfer. Personal loans typically have lower interest rates than credit cards and a fixed loan term. They also have fixed interest rates, so your payments will be predictable.

To apply for a personal loan, you'll need to provide financial information and meet the lender's requirements. Once approved, your loan will be funded, and you'll be ready to tackle your credit card debt.

Debt consolidation through a personal loan lender like Rocket Loans℠ is just one option for getting out of credit card debt, but it can offer peace of mind and an easy, single payment that helps streamline your whole process.

The bottom line: How to recover from holiday overspending

The best way to avoid holiday overspending is to set a budget for the season and stick to it. If you do spend more than you expected, strategies for paying off your debts include a spending detox and consolidating your debts with a personal loan, low- or no-interest credit card, or by borrowing against your home equity.

If you'd like to get a handle on your holiday debt, you can explore personal loans from Rocket Loans today.