How should you consolidate debt after Christmas?

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

• Personal loans
• Balance transfer credit cards

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Name	Product	Filter Values	APR	Min. Credit Score	Loan amount
Best Egg personal loans			5.99% to 29.99%	600	$2,000 - $50,000	A prime online lending platform with multiple repayment methods.	Go to site View details	Compare	loading Fetching your data...
Upstart personal loans			7.86% to 35.99%	580 or 600 depending on state of residence	$1,000 - $50,000	This service looks beyond your credit score to get you a competitive-rate personal loan.	Go to site View details	Compare	loading Fetching your data...
LendingPoint personal loans			9.99% to 35.99%	585	$2,000 - $36,500	Get a personal loan with reasonable rates even if you have a fair credit score in the 600s.	Go to site View details	Compare	loading Fetching your data...

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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	670		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.	Apply now View details	Compare	loading Fetching your data...
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	670		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.	Apply now View details	Compare	loading Fetching your data...
TD Cash Credit Card			0% intro for the first 15 months (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. Available in: CT, DC, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT	Apply now View details	Compare	loading Fetching your data...

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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.

• Debt consolidation personal loans

  • Interest rate. Debt consolidation loans can have either a fixed or variable interest rate. As the name implies, a fixed rate will remain the same over the life of your loan, while a variable rate may change with the market. Whichever you choose, you may be able to score a lower APR than you would with many credit cards.
  • Loan limits. Consider how much a lender offers and whether it’s enough to cover the amount of debt you want to consolidate. If you want to combine more than just your Christmas debt, you may want to find a lender that offers larger loans.
  • Loan terms. Personal loans have fixed terms, usually between one and seven years. A shorter term may have higher monthly repayments, but it could be beneficial if you want that holiday debt paid off before next year’s festivities.
  • Fees. Check for upfront fees such as an origination or application fee as well as ongoing fees such as annual or monthly fees. These fees will add to your debt and increase your APR. And if you plan on paying your loan off early, you’ll want to keep an eye out for prepayment penalties.

• Balance transfer credit cards

  • Promotional rate. Most cards offer a low starting APR for the first few months, but this generally increases to a normal credit card rate after the promotional period ends.
  • Balance transfer promotional period. How long the promotional rate applies depends on the creditor. Typically, you’ll have anywhere from three to 21 months with that low introductory APR before it changes.
  • Fees. Balance transfer credit cards have many of the same fees as normal credit cards, but you may also have to contend with a balance transfer fee that increases the initial cost of moving your balances.
  • Revert rate. All balance transfer cards have a revert rate, which is the rate that will apply to your balance after the promotional period ends.
  • Purchase rate. What is the purchase rate and is it competitive? If you’re planning to keep the card after you repay your debt — perhaps for next year’s holiday shopping — this is good to check.
  • Balance transfer limits and restrictions. Confirm how much you’re able to transfer. You’ll also likely need to make the balance transfer at the time of application in order to take advantage of the promotional rate. Make sure you’re familiar with the card’s restrictions before you apply.

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.

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.

Frequently asked questions

• Will I be eligible for Christmas debt consolidation with bad credit?

  It’s unlikely that you’ll be eligible for a balance transfer credit card, but there may still be some personal loan options if you have bad credit. However, you can expect higher rates, which may make debt consolidation less than ideal.

• What should I do if I wasn't approved for the credit limit I need?

  If you’ve only been approved for a portion of the Christmas debt you want to transfer or consolidate, you have two options:

  • Decline the new loan or credit card
  • Consolidate or transfer a portion of your Christmas debt onto the new loan or credit card

  If you decide to consolidate or transfer your Christmas debt, put a strategy in place. It may be more beneficial to consolidate debts with higher interest rates onto one loan or card, or you may want to combine multiple monthly repayments into one. Whichever you choose, make sure it fits into your budget and is affordable.

• Can I consolidate debts that aren't related to holiday debt?

  Yes. Because the consolidation or balance transfer process is the same for most types of debt, you can typically combine multiple debts into one.