Holidays are fun, but all the merry-making comes at a cost. While you may be an avid budgeter, it’s possible that you end up spending more than you intended due to the unforeseen cost of festivities. Most of these expenses end up racking up your credit card debt, which can be as high as over $1000.

No matter the amount of debt you are looking at, managing that debt is the best way to start off the new year. To guide you on this, here are the best ways to pay off your credit cards after the holidays.

1. Start by Making a Budget

Whenever debts come into play, the first step is usually coming up with a budget and sticking to it. This is the best way to track your spending and to ensure that you do not divert your income to unnecessary expenditure. Start by modifying your existing budget to reflect the debt.

This will force you to assign every dollar to debt repayment, savings, or important expenses like bills and groceries. To free up money for the increased debt, you may have to forego some nonessential expenses such as driving to work and eating out, for public transport and home cooking respectively.

2. Stop Using the Cards

This might sound impractical and harsh but it’s the only way to keep the existing credit card debts in check. Continuing to use the cards will only raise your debt which can lead to frustrations and eventual disregard of your budget.

This is easier said than done hence you should adopt extraordinary measures. For example, you can lock away the cards, cancel subscriptions that you charge on the cards, and switch to cash or debit cards for all expenditure- until you have paid off the debt.  

3. Consolidate your Debts

Credit cards usually come at a higher interest rate than other lines of credit. As of December 2021, the average credit card APR stood at a steep rate of 16.13%. This is in contrast to personal loans which come at a fixed rate which can be as low as 4.5%.

With this in mind, you can reduce the bleeding by consolidating your credit card debts with a personal loan. Not only will this reduce the payable interest, but it will also help in increasing your creditworthiness; personal loans are more favorable on your credit scores than credit card debts.  

4. Prioritize your Repayments

Credit cards come at different interest rates. Knowledge of this can help you in formulating a specific order in which to settle the debts. The idea would be to reduce payable interests and roll overpayments. For this to work, start by paying off the credit cards with the highest interest rates. This approach will help you to save precious dollars in the long run. This is especially so if the cards with the highest APRs also happen to carry the highest balance.

Having said that, this could mean taking a long time to clear off a single card, which can be demotivating. In such a case it would also be helpful to integrate your payments with clearing off some of the cards with the lowest balances- this will help in motivating you to carry on.

5. Increase your Income

Unless you have assets that you can sell, all debt repayments will come from your income. Thus it goes without saying that earning more money will increase your chances of being debt-free. Boosting your income will require you to add on overtime hours or get another job, which can be in form of a part-time job like walking dogs or driving for Lyft.   

Final Word It’s easy to find yourself facing a whole year of credit card debts due to unintended over-the-holidays expenses. There are several ways to get out of such debts as highlighted above. The bottom line to avoiding dragging the debts however lies with coming up with a solid repayment plan and sticking to it at all costs.