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How should you consolidate debt after Christmas?

Compare your personal loan and balance transfer credit card options.

Updated

Fact checked

If Christmas and the surrounding gift-giving season left you hundreds of dollars in debt, you’re not alone. Americans spend more than $700 on average each year on gifts. But there are several tools to help you consolidate this debt and get your personal finances back on track.

How can I consolidate my Christmas debt?

Your debt may have increased because of holiday spending, but that doesn’t make it special to your creditors — which means it won’t be treated any differently when you decide to consolidate. When you’re ready to combine your payments, lower your interest rate or change your terms, you’ll typically choose from two main options.

Debt consolidation personal loans

Debt consolidation loans are unsecured and allow you to combine a number of debts — including your Christmas debt — into one term loan. You may be able to reduce your interest rate and the fees you pay or lower your monthly repayment by increasing your loan term. It’s all about determining what you need based on your budget. In general, you can expect a term of one to seven years. Rates may stretch up to 36% APR, but those with good to excellent credit could receive an APR in the single digits.

Balance transfer credit cards

If you have debt across multiple credit cards, you may be able to consolidate your debt onto a balance transfer credit card. Many cards have an introductory rate as low as 0%, which can apply to your balance transfer for up to 21 months. As long as you repay the debt within that period and don’t use the card for additional purchases, you can pay down your Christmas debt at the promotional rate.

Which debt consolidation option is best for me?

The best debt consolidation option depends on the type of debt you have and if you choose to consolidate more than just Christmas debt.

  • If you have loan debt: There are some providers that allow you to transfer personal loans onto credit cards. You can also refinance by switching from one personal loan provider to another, which may allow you to lower your rate without having to worry about a promotional period or the enticing option of using your new credit card to make purchases.
  • If you have credit card debt: Credit card debt wracked up during the holiday season can be daunting, but you do have the choice between a balance transfer credit card or a debt consolidation personal loan. Balance transfers are typically best for smaller debts, while personal loans can help with larger debts.
  • If you have credit card and loan debt: You can also choose between a debt consolidation personal loan and a balance transfer credit card that also accepts personal loan debts. The amount of debt you have and how you want to repay it will affect which option is the right choice for you.

Balance transfer credit cards vs. debt consolidation loans

Compare personal loans and credit cards for debt consolidation

Data indicated here is updated regularly
Name Product Filter Values APR Min. Credit Score Max. Loan Amount
Credible personal loans
4.99% to 35.99%
Fair to excellent credit
$100,000
Get personalized rates in minutes and then choose an offer from a selection of top online lenders.
SoFi personal loans
5.99% to 18.53%
680
$100,000
A highly-rated lender with competitive rates, high loan amounts and no fees.
Upstart personal loans
8.69% to 35.99%
580 or 600 depending on state of residence
$50,000
This service looks beyond your credit score to get you a competitive-rate personal loan.
LendingTree personal loans
Starting from 3.99%
Good to excellent credit
$50,000
Receive up to five loan offers in just minutes through LendingTree's simple online form.
NetCredit personal loans
34% to 155%
No minimum
$10,500
Check eligibility in minutes and get a personalized quote without affecting your credit score.
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Compare up to 4 providers

%
Name Product Amount saved Balance transfer APR Balance transfer fee Recommended minimum credit score Filter values
Citi® Diamond Preferred® Card
0% intro for the first 18 months (then 14.74% to 24.74% variable)
$5 or 3% of the transaction, whichever is greater
740
An impressive 18 months intro APR on balance transfers and purchases, as well as no annual fee make this one of the top 0% APR cards available.
Citi® Double Cash Card
0% intro for the first 18 months (then 13.99% to 23.99% variable)
$5 or 3% of the transaction, whichever is greater
740
Get a strong 18 month 0% intro APR on balance transfers AND up to 2% back. This is a rare card that offers both rewards and balance transfers.
Luxury Card Mastercard® Titanium Card™
0% intro for the first 15 billing cycles (then 14.99% variable)
$5 or 3% of the transaction, whichever is greater
700
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
TD Cash Credit Card
0% intro for the first 15 billing cycles (then 12.99%, 17.99% or 22.99% variable)
$5 or 3% of the transaction, whichever is greater
680
3% on dining and 2% on groceries make this a valuable card for food purchases. Use it while traveling, too, with no foreign transaction fees. Available in: CT, DC, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT
CardMatch™ from creditcards.com
See issuer's website
300
Use the CardMatch tool to find cards you're likely to qualify for with your credit score, without a hard pull on your credit.
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What factors should I consider before consolidating my holiday debt?

Debt consolidation loans and balance transfer credit cards each offer their own unique features. Take a moment to consider both before making a major commitment.

4 ways to plan for Christmas debt consolidation

Before you jump into an application for a new loan or credit card, take a moment to understand your debt and prepare for your next steps.

  1. Create a budget. Figure out how much you can afford to repay before you consolidate your debt by using our personal loan calculator or our balance transfer calculator. This is especially important if you’re applying for a balance transfer credit card — it can be easy to slip into making just the minimum repayments and getting stuck with a high APR when the promotional period ends.
  2. Check eligibility requirements. Avoid a rejection notice and a hard credit check by knowing the eligibility requirements before you apply. If you’re unsure, reach out to the provider. Many have minimum credit score or income requirements you need to meet in order to qualify.
  3. Understand restrictions. Every provider has restrictions on the debt you can transfer or consolidate. If you’re only moving Christmas debt from one credit card to another, then you may not have a problem. But if you’re trying to combine student loan debt with your Christmas spending, you may face a rejection. Like eligibility, check with your provider first.
  4. Check for fees. Whether you’re taking out a loan or using a credit card, check the provider for any fees that come with it. If you’re planning on using a debt consolidation loan, check if it comes with any origination or monthly fees. Likewise, if you’re applying for a balance transfer credit card, check with the provider to see if there’s any surcharges that come with transferring individual balances.
  5. Have a backup plan. Do you know what you’ll do if you aren’t approved? What if you’re only approved for a portion of what you need? Consider other ways to pay back your debt. After all, multiple credit applications in a short space of time can affect your credit score, so it’ll be helpful to have a plan B ready to go.

How can I avoid debt during the next holiday season?

The easiest way to avoid taking on debt during the holidays is to plan ahead and start saving up. According to our study on holiday spending, almost 60% of people use a credit card to pay for a portion of their purchases and another 11% rely on some type of loan — but that doesn’t have to be the case.

Here are a few quick ways to keep ahead of holiday debt:

  • Make a budget to limit your holiday spending
  • Start shopping months in advance
  • Buy gifts a little at a time, as you can afford them
  • Track your spending
  • Compare prices at different shops
  • Know the best sale dates
  • Invest in meaningful, rather than expensive, gifts

If you do plan on paying for some of your gifts with a credit card, try to pay more than just the minimum each month leading up to Christmas. By getting gifts ahead of the holiday season, you can keep your total debt down and avoid one big bill come January.

Bottom line

Consolidating Christmas debt doesn’t have to be a post-holiday nightmare. Even if you don’t choose to combine it with any of your other debts, simply lowering your monthly payment or getting a better deal on your APR can help reduce your costs now so you can start saving for next Christmas.

If you’re ready to switch things up, read our guide on debt consolidation to learn more about the specific options available to you.

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