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How to pay down holiday debt

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How to pay down holiday debt

The holidays are officially over, but the debt remains. Overspending happens every year during this time, and once the holiday glow is over, the bills start taking over.

About 31 percent of consumers took on debt to cover their holiday expenses in 2020. Of those who did, they spent $1,381 on average, with 56 percent of consumers using credit cards for their purchases.

If you ended up overdoing it a bit around the holidays, it might take some work to get back on track. Here are some helpful tips on paying back the money you borrowed quickly and affordably.


Know your budget

If you don’t have a budget, make one. Our Money Management program can help you do it! If you do, revisit it. Make a list of who you owe, how much you owe and the interest rate for each.


Create a plan to pay down debt

First, be sure to add your credit card payments to your budget in the new year. Next, pick a payment method: The snowball method or avalanche method. Both methods have pros and cons to weigh.

  • Snowball method: Put all of your money on paying down the smallest debt first, then the next smallest and so on.
  • Avalanche method: Pay the credit card with the highest annual percentage rate first.

The most important thing to do when paying down debt is to stick to your plan. The easiest way to do this is to automate your payments. Set a data for the minimum payments to automatically come out of your account, then set another date later in the month for an extra payment.


Pay more than the minimum

Typically a minimum payment is only 1 percent of the total, plus interest. If paying only the minimum on $6,300 (the average amount of household credit card debt in America, with an average interest rate of 16 percent), it would take 17 years to pay it down. You’d owe an additional $7,100 in interest.

Doubling the amount each month will result in a little over two years of payments with only $1,100 in interest.


Lower your rate

Arsenal Credit Union offers you several ways to consolidate your high-interest credit card debt from other lenders. Contact us to learn if any of the below options will work for your unique needs.

No fees for balance transfers on credit cards

There is no fee to transfer a balance from a high-rate bank or retail credit card to one of ours. Our rates start as low as 9.90 percent APR*.

Learn More

Personal loans

This method of consolidation lets you pay off balances from several credit cards at once. You’ll be able to make one, consistent monthly payment instead of scheduling multiple payments with different lenders.

Learn More

Home equity loans and lines of credit

A home equity loan or line of credit lets you use the equity you’ve built in your home as a source of ready cash for debt consolidation. Our home loan products have no closing costs** and allow you to borrow up to 100 percent.

Learn More


*APR=Annual Percentage Rate. Rates current as of 1-1-2022 and subject to change.

**ACU may pay closing costs for home equity loans or lines of credit. If the borrower repays the loan within the first 12 months, the borrower must reimburse the credit union for the closing costs. Borrower is responsible for obtaining and paying for comprehensive insurance to cover the value of the real estate.

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