Nearly one third of Americans go into debt during the holidays.
On top of that, financial experts say the average American with a credit card holds a debt of $7,000 and a big chunk of that comes from holiday spending.
That’s debt that can hang around.
"70% of people that go into debt are still paying on debt not just from last Christmas, but two Christmas's ago," said investment expert Michael Terrio.
Terrio helped us pinpoint 5 ways to erase your holiday debt.
1. Tackle the highest interest rate or lowest debt first
Taking care of the highest rate first works because that card is charging you the most amount of money. Tackling the lowest debt first has its rewards as well. Terrio said, "Mentally it gives us a better reward system and it gets the momentum, it gets us on the trail to get this thing going in a successful manner."
2. Transfer you credit balance to a zero percent interest card
This can help only if you pay off the amount in a year. If not you could have a penalty fee.
3. Throw any spare money at your debt
If possible use your tax return to pay down debt. Anything will help, even as little as $10 a month.
4. Add up your holiday tab and divide it by 12
For example, if you spent $1,200 last holiday season, divide that by 12. That equals $100. Put away $100 a month so you have that amount ready for December.
5. Avoid quick fixes
Don’t dip into retirement savings, use a home equity line of credit or take out a payday loan. These practices can lead to even more debt in the long run because you pay penalties and higher interest rates.
"This isn't just going to be not good now but this is going to be really bad in the future. Whose retirement are they funding? Theirs or the credit cards?” said Terrio.
