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The holiday season is just around the corner, and while it’s a time of celebration, it can also lead to financial stress if you’re already carrying credit card debt. Getting a handle on your credit card balance before the holidays can help you start the new year with less financial burden. Here are some practical strategies to help you manage and reduce your debt as we head into the busiest shopping season of the year.
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1. Pay Down Existing Balances Before Holiday Shopping
If you’re already carrying a credit card balance, focus on reducing it before holiday shopping kicks in. Make a realistic budget for your holiday spending, and stick to it. When you know what you can spend and commit to it, you’re less likely to rack up additional debt. Tackling your balance now can give you a cleaner slate—and a clearer mind—when the holiday bills arrive.
2. Use Cash Back Rewards Wisely
Many credit cards offer cash back rewards, and the holidays are a great time to put them to good use. Rather than cashing them out or spending on new items, apply these rewards as a statement credit to help reduce your current balance. This can make a small but meaningful dent in your debt, giving you a bit more breathing room to pay off the rest.
3. Pay with Cash to Avoid New Debt
One simple way to avoid additional credit card debt is to pay with cash whenever possible. Not only does this help you stay within your budget, but it also keeps you from adding to your credit card balance. Consider setting aside a portion of each paycheck specifically for paying down your existing credit card debt. This habit can gradually chip away at your balance without the added stress of high-interest charges.
4. Consider Promotional Balance Transfers (Carefully)
If you have a credit card with high interest, check if you’re eligible for a promotional balance transfer offer. Many cards offer no-interest balance transfers for a certain period—often six months to a year. A balance transfer can be a great way to reduce interest charges and pay off debt faster, but there are some key things to keep in mind:
Watch out for transfer fees: Some cards charge a balance transfer fee, which could offset some of the interest savings.
Set a reminder for the end of the promotional period: Once the period ends, regular interest rates kick in, so make a plan to pay off the transferred balance before that happens.
5. Time Your Big Purchases
If you do need to make a large purchase with a credit card, consider the timing of your statement cycle. Knowing when your credit card cycles end can help you maximize the time you have to pay off the purchase without incurring interest. For example, if you have two credit cards with statement cycles ending on the 1st and 15th of the month, and you need to make a purchase on the 5th, choose the card that closed its cycle on the 1st. This way, you’ll have almost an extra month to pay off that balance without interest.
Final Thoughts
As I often tell my clients, budgeting and managing debt are especially important during the holidays. Getting a handle on your finances now can help you start the new year off right—without a mountain of debt. With some planning, discipline, and smart spending habits, you can make this holiday season a little brighter financially.
Happy holidays, and here’s to a financially healthy start to the new year!
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About the Author:
David Peters, CPA, CFP, ChFC, CLU, CPCU, CGMA, is the Founder and Owner of Peters Professional Education (petersprofessionaleducation.com) and Peters Tax Preparation & Consulting, PC. David Peters is also registered with the U.S. Securities and Exchange Commission (SEC) as an Investment Advisor Representative (IAR) with Peters Financial LLC. He regularly teaches courses in accounting, finance, insurance, financial planning, and ethics throughout the United States, and regularly contributes regularly to various professional publications, including NCACPA’s Interim Report, SCACPA’s CPA Report, and VSCPA’s Disclosures.
Required Disclosure:
The content presented above is for informational purposes only, is general in nature, and is not intended to and should not be relied upon or construed as financial, investment, or estate planning advice. This does not constitute an offer to sell or a solicitation to buy any security, investment or planning product. Past performance is not indicative of future results. All investments involve risk, including the possible loss of principal. Please consult with a financial advisor to assess your individual situation.
Financial and investment advisory services offered through Peters Financial LLC. Brokerage and custodial services offered through Charles Schwab Co. Inc., member FINRA and SIPC. Peters Financial LLC and Charles Schwab Co. Inc. are not affiliated. David Peters also offers tax services through Peters Tax Preparation & Consulting, PC. Peters Tax Preparation & Consulting, PC is not affiliated with Peters Financial LLC and clients or prospective clients are never obligated to use Peters Tax Preparation & Consulting, PC. as part of any financial planning or investment management services offered by Peters Financial LLC.
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