How to cure a holiday debt hangover

NEW YORK (Reuters) – The holidays are over, but we hope you took some lasting memories with you. Some of them were priceless and others came at a price.

For the latter, here’s the bad news: It’s January and the bill is due.

Some call it the “holiday debt hangover,” and this year seems to be much worse than most. The ugly stew of inflation, record high credit card rates — and the fact that we were already spending like sailors earlier in 2022, even before the holidays — all spell trouble for our 2023 balance sheets.

“More than a third of Americans say they spent too much this holiday season,” said Jill Gonzalez, senior analyst at WalletHub, which polled Americans for its post-holiday shopping survey.

About $80 billion in credit card debt was added in the last quarter of 2022 alone, on top of the roughly $95 billion accumulated in the first three quarters, according to Gonzalez.

“The last months of the year are typically when people add the most debt, but it’s more than ever in the context of inflation,” Gonzalez said.

Some other worrying findings: A quarter of people say they already regret shopping on holiday. Meanwhile, 22% say it will take three months to pay off those holiday bills, 11% say six months, and 13% say it will take an entire year, by which time it will be Christmas, Hanukkah and Kwanzaa again.

It’s what you call a vicious cycle, exacerbated by the fact that many of us live beyond our means anyway, holidays or not.

“When people get into vacation credit card debt, it’s not like the costs stop there,” said Tori Dunlap, author of the new book, “Financial Feminist,” and founder of “Put in another $200, and another $500, and suddenly you’re in compound interest hell that you can’t get out of.”

So how can consumers defuse the debt bomb and make sure it doesn’t explode again next year? A few thoughts from the experts:


You may not know that your credit card interest rate often rises along with federal rates. That means average rates rose to 19.85%, according to financial information site Bankrate, the highest rate on record.

These high-interest numbers won’t help you attack your debt principal. Consider transferring that debt to a card where you’ll pay 0% for an introductory period.

“My favorites are Citi Simplicity, Citi Diamond Preferred, BankAmericard and Wells Fargo Reflect,” said Ted Rossman, senior analyst at Bankrate. “They all offer 0% balance transfer terms for up to 21 months, the longest on the market.”


If you’re looking at a barrel of several thousand dollars in debt, you’re going to have to make some tough budget decisions. Atlanta-based financial planner Niv Persaud recommends moving monthly spending away from discretionary categories like entertainment or travel, at least for a while.

Other Persaud tips include selling or returning unwanted Christmas presents and unsubscribing from shopping emails or newsletters, the temptation of which will only make the problem worse.

If possible, dedicate more hours to your side hustle, for an extra income stream to help pay off what you owe, Persaud said.

If cutting back on spending or working extra seems daunting, “remember that it’s only temporary until you get your credit card debt to $0,” she said.


Money is a complicated subject that draws out a lot of emotional stuff: one’s upbringing, family relationships, sense of self-worth, and so on. To figure out why you’re taking on holiday debt, you may have to do some of that hard emotional work, Dunlap said.

“Start with why it’s happening in the first place.” Do you think that ‘Unless I buy expensive gifts for my partner, they won’t love me?’ It’s not a financial issue – it’s a partnership issue,” notes Dunlap.

To take some of the pressure off yourself to spend, think back to your childhood holidays and what was important and what wasn’t. Chances are it wasn’t about the money.

“For kids to have a great Christmas, it’s all about making memories,” Dunlap said. “Trust me he won’t even remember any of the toys.”

(Reporting by Chris Taylor in New York; Editing by Lauren Young and Matthew Lewis; Follow us @ReutersMoney)

Copyright 2023 Thomson Reuters.

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