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Published: Jan 03, 2024 7 min read
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This article is part of Money's new-year checklist — a 10-step guide to crushing your financial goals in 2024 (and beyond). For expert tips on how to get a raise, protect your identity from AI scams and more, read our cover story.


Celebrated a little too hard in December? You’re not alone. Although the holidays are fun, when you add up expenses from travel, parties and gift-giving, they can also lead to many months of paying off credit cards.

Just ask the 25% of Americans who got themselves into credit card debt last holiday season, according to a recent survey by coupon tracking site CouponFollow. As of November 2023, more than a third of those borrowers said they still hadn’t paid off their balance completely.

U.S. credit card balances reached more than $1 trillion in 2023, according to Federal Reserve data, an all-time high. Given that the average credit card interest rate is hovering around a record-breaking 22.7%, it’s not hard to understand why so many borrowers are struggling with lingering debt.

If you’re one of them, the bad news is that your balance is going to keep growing — potentially at a greater clip than any point in economic history — if you don’t pay it off. The good news is that there are several strategies you can use to meet that pesky New Year’s resolution to finally get rid of your debt.

These are some of Money’s tried-and-true methods for paying off debt after the holidays.

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Debt 'snowball' and 'avalanche' methods

You’ve probably heard of Dave Ramsey’s controversial debt “snowball” strategy, which prioritizes paying debts on multiple cards from smallest to largest. First, you compile a list of your debts by order of balance and pay the minimum due on each debt every month. Then you pay $100 (or another amount) more per month toward your smallest debt until you’ve eliminated them all.

Despite its popularity as a debt repayment method, snowballing won’t work for everyone, and it can actually cost you more money and time than other relief options because it fails to incorporate interest.

Many borrowers find the debt “avalanche” method makes more sense: It essentially works the same way as the snowball method, but instead you pay your debts from highest to lowest APR. This way, you’ll be able to avoid accumulating interest and pay back your debt quicker.

Balance transfer

It may seem nonsensical to get out of debt by opening a new line of credit, but many credit card companies offer a low or even 0% annual percentage rate (APR) for six to 21 months as a promotion. Money has a few recommended cards for balance transfers in this guide.

This type of debt consolidation can give you a decent chunk of time to pay off your debt while avoiding sky-high interest. Be aware, though, that you’ll usually have to pay a certain percentage of the balance you transfer to your low-APR card. And if you already have multiple credit cards or a lot of inquiries on your credit report, applying for a new card can further damage your score.

Debt settlement

You may be able to negotiate with your credit card lender if you’re a long-time customer with a record of on-time payments. By working directly with your lender or using a third-party credit counselor (more on that in a minute), you can potentially reduce what you owe by offering a lump sum payment. You just have to ask.

Not everyone will be able to afford to pay this lump sum, but it’s possible in some cases to work out a lower interest rate. The point is to try communicating with your credit card company. When you call your lender, tell them that you’re seeking a rate reduction and explain why (maybe you have unexpected expenses, for example, or your salary was cut).

Even if your lender doesn’t grant you a permanent lower interest rate, you may be able to get a temporary break, like a 12-month rate reduction of a few percentage points. But before you pick up the phone, you should know that there can be negative consequences to debt settlement, like a temporary ding to your credit score. You may also owe taxes on any debt that your lender forgives.

You can find more advice in our credit card debt negotiation guide.

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Credit counseling

There’s no shame in asking for help when you need it — credit counseling services exist to help borrowers lower their outstanding debt and avoid accumulating more in the future. Most services are nonprofit and will assess your finances to create a tailored debt management or repayment plan.

Your credit counselor can create a debt management plan (DMP), which can help you establish a budget, reduce interest, cancel fees, negotiate with creditors or consolidate what you owe. However, you will most likely have to pay for this: The average DMP setup fee in 2022 was $33, and the average monthly fee was $24, according to nonprofit credit counseling agency Money Management International.

In some cases, you may be able to access free financial counseling through organizations like the National Foundation for Credit Counseling, so that's a good place to start.

Consolidate with a personal loan

Personal loans have become a popular way to consolidate debt at rates below the average credit card APR. Debt consolidation loans can be used for other types of debt in addition to credit cards, like medical or other personal loan debt.

When you apply and are approved for a personal loan, your new lender typically deposits a one-time cash payment into your account so you can pay off your other lenders. Then, over a certain period of time, you make monthly payments on your new loan at a fixed interest rate.

All debt consolidation loans are technically personal loans, but some lenders will have other products called “personal loans” that aren’t necessarily for the purpose of debt consolidation. That said, you can still use them for debt consolidation, and they work pretty much the same way — just make sure you’re getting the lowest interest rate possible.

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