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Here are some strategies that can help you get rid of your vacation debt


Here are some strategies that can help you get rid of your vacation debt

While some Americans are still recovering from the holiday festivities, many others may have lingering effects of spending regrets. Overall, U.S. retail sales rose 7.6% year-over-year between Nov. 1 and Dec. 24, according to the latest Mastercard SpendingPulse survey.

For many consumers, the amount of debt they’ve taken on to pay for their holiday shopping has also increased. A new study by LendingTree found that 35% of Americans had accumulated vacation debt in 2022. The average amount was $1,549, the highest level since 2015, when the survey was first conducted. And 37% of those who incurred holiday debt said it would take them at least five months to pay it off.

If you want to pay off your vacation debt long before this summer, here are seven steps you need to take now.

1. Pay off a fixed amount of debt in 3-5 months

2. Work on improving your credit score

If your credit score is “good” to “excellent” — a FICO score of 670 or higher on a scale of 300 to 850 — you’re more likely to qualify for lower credit card interest rates. , car loans and mortgages, experts say. So having a good score can have a dramatic impact on the cost of your debt. The more you reduce the cost of debt, the faster you will pay it off.

Some credit card companies will provide your credit score for free. It’s often on your account statement. To improve your score, start by checking your credit report and disputing any errors.

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Through the end of 2023, you can get a free weekly copy of your report from each of the major credit bureaus – Equifax, Experian and TransUnion – at

Of course, you have to pay your bills on time every time.

Also, don’t get too close to your credit limit on your cards. According to credit experts, using less than 30% of your available credit can help you maintain your score, while using less than 10% can actually help increase that number.

3. Apply for a 0% interest balance transfer credit card

Ask for a card with a 0% APR introductory offer on balance transfers. Transfer your current credit card balances to this new card. You may be charged a 3% fee on the amount you transfer, but you’ll pay no interest on your debt for 12-20 months.

“A 0% balance transfer card, if you have enough credit to get one, is the best weapon against credit card debt,” said Matt Schulz, chief credit analyst at LendingTree. “You can go almost two years without arousing interest.”

Again, you generally need to have good or excellent credit to qualify for the best deals. Also, you probably won’t be able to do a balance transfer with the same card issuer.

4. Ask your credit card issuer to lower your rate

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If you don’t ask for a lower rate, you won’t get it. But if you ask, you probably will. A Lending Tree survey found that 70% of people who asked for a lower interest rate on a card got one, and the average discount was seven percentage points.

Making that phone call now is more important than ever. After seven consecutive Federal Reserve interest rate hikes, the average rate on a credit card is around 23%. Rates on store credit cards are over 30%.

Asking for a lower rate “is a good hedge against another Fed rate hike and against the skyrocketing costs we’ve seen over the past year,” Schulz said.

5. Consolidate your debts with a personal loan

If you can’t get a 0% or lower rate offer on a card, try applying for a personal loan. If you qualify for a large enough loan with a lower interest rate than your current card, you can consolidate all or most of your credit card debt with that loan.

In early December, the average personal loan rate was 10.64%, less than half the average credit card rate, according to

Don’t spend that loan money. If you take out a personal loan to pay off credit card debt, be sure to pay off your card balance immediately with the loan money.

6. Check Buy Now, Pay Loans Later

42% of “buy now, pay later” people have made late payments for these loans, survey finds

According to the PwC survey, approximately 1 in 10 consumers planned to use buy now, pay later loans for holiday shopping. You make an upfront payment with buy now, pay for the products later, and then pay off the rest of the purchase in a predetermined number of installments.

Buy now, pay later plans often don’t charge interest unless you miss a payment. If you miss one, you could receive interest on the unpaid balance, as well as late fees. So be sure to double check the terms of buy now, pay later and fully comply.

7. Contact a nonprofit credit counselor

Get a full review of your financial situation and an overview of your credit obligations — credit cards and loans — for free from a credit counsellor. When you work with a nonprofit credit counseling agency that is part of the National Foundation for Credit Counseling, you pay no fee for the initial counseling session.

“The outcome of the session culminates in the delivery of an action plan, identifying every possible option to improve financial well-being and manage debt,” said NFCC Senior Vice President Bruce McClary.

The advisor may recommend developing a “debt management plan” between you and card issuers or lenders to modify your original payment arrangement. This plan may allow you to extend your repayment term, reduce the interest rate and/or waive fees. You will still have to pay in full, just in more manageable circumstances.

A fee is typically charged for a debt management plan, McClary said, with a program activation fee of $40 to $50 and a monthly fee of $25 to $35. The cost may vary depending on the amount of debt that is part of the plan or the number of accounts included.

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