It’s no surprise that many Americans are closing out their holiday festivities with increased debt. This season, a LendingTree survey reveals that a notable 36% of U.S. consumers took on holiday debt. On average, those individuals racked up approximately $1,181, which, though higher than last year’s $1,028, is still a step down from the 2022 figure of $1,549.
What’s interesting is that less than half of these consumers, around 44%, anticipated taking on this additional financial burden. Matt Schulz, the chief credit analyst at LendingTree, interprets this as a sign of ongoing financial hardship for many during the holidays.
High living costs, driven by inflation, continue to pinch wallets this season. Schulz mentions, “A lot of people just wanted to end a tough year by spreading some joy, even if it meant incurring a bit more debt.”
Certain groups found themselves more likely to accumulate holiday debt: parents with young kids at 48%, millennials aged 28 to 43 with 42%, and those earning between $30,000 and $49,999 sitting at 39%.
However, there’s a risk that this holiday debt might linger. WalletHub recently highlighted that nearly half of Americans are still paying off debts from previous holiday seasons. Looking forward, tackling debt tops the financial resolution list for 2025, as per a Bankrate poll.
The key to financial freedom, according to Schulz, is starting the debt repayment journey sooner rather than later. Laura Mattia, a certified financial planner based in Sarasota, Florida, echoes this sentiment. “Being debt-free brings a profound comfort,” Mattia shares, acknowledging the relief in not owing money.
For those facing high-interest debt—42% of participants in the survey are dealing with rates of 20% or more, typically from credit or store cards—there’s hope. Options like 0% balance transfer credit cards or debt consolidation loans can significantly alleviate the repayment process. “A 0% balance transfer card is one of the best tools against credit card debt,” Schulz advises, though it’s important to note potential balance transfer fees.
Choosing an effective debt repayment strategy is equally crucial. Two popular methods are the avalanche strategy, which focuses on high-interest debts first, and the snowball method, which targets smaller balances initially. “Whether it’s snowball or avalanche, pick the one that keeps you driven,” says Schulz. Mattia often guides her clients to knock out smaller debts first, offering them a motivational boost early on.
While eliminating debt should be a primary focus, setting aside funds for emergencies is equally important. Having some savings can lessen dependency on credit cards for unforeseen expenses or the next festive season. Schulz suggests that a balance of saving while reducing debt can break the daunting debt cycle. Mattia reminds us to weigh savings interest against credit card interest, currently over 20%.
Jesse Sell, a CFP at Prevail Financial Partners in Stillwater, Minnesota, recommends positive reinforcement through the holiday debt repayment process. “It’s normal to relax your financial discipline a bit during the holidays,” Sell says. Setting realistic, smaller milestones can make the process more rewarding, even if the task itself isn’t the most enjoyable. “Find ways to stay positive and maintain momentum,” Sell encourages, highlighting the power of celebrating each small financial victory.
