Tips and Advice

Relief for Holiday Overspending

Holiday overspending can put even the best budgets to the test. Learn how to fix holiday overspending and make sure you don't do the same thing next year.
Edited by:
Kristin Marino verified

The 2021 holiday shopping season saw increases over 2020, with regular retail sales jumping by 8.5% and e-commerce sales increasing by 11%, according to a report from Mastercard’s SpendingPulse.

With various drivers to the holiday spending season, which traditionally runs from November 1 to December 24, it’s no surprise that shopping surged. However, while this news might bode well for the economy, many individuals find themselves dealing with debt after the holiday spending season.

If you’re struggling with holiday debt, there are some strategies you can use to reduce the impact and get back on track. Let’s take a look at holiday spending trends from 2021, and learn what you can do to improve your own financial situation.


Why Was Holiday Spending So Big in 2021?

Even before the holiday spending season started, the National Retail Foundation (NRF) expected to see a robust shopping season. There were a few factors that set the holiday shopping season up for a surge:

  • Rising income: According to the NRF, incomes saw a bump in 2021. This could potentially position households to be able to afford to spend more during the holiday season.
  • Increase in personal savings: Since the beginning of the pandemic in 2020, the personal savings rate in the United States has increased, according to the St. Louis Federal Reserve. While the savings rate fell during the last part of 2021, the reality is that many consumers likely had some savings available to spend on consumer purchases during the holiday shopping season.
  • Potential covid fatigue: Another possibility is that covid fatigue has set in, and many people are using holiday spending as a way to combat that. Because the SpendingPulse survey found a big jump in in-store spending, it seems as though some consumers were eager to get out of the house.
  • Supply chain issues: Both the SpendingPulse and NRF data indicated that supply chain concerns influenced the holiday shopping season. Many consumers ordered items early, and the big increase in e-commerce sales played a role in the increased spending in 2021.

With all of this holiday spending, it’s little surprise that some consumers have ended up in over their heads with holiday debt.


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How to Tell if Your Holiday Spending Was Too Much

Even when you have savings and an increased income, it can be hard to gauge whether you’re overspending. There are some indications that you might have spent too much this holiday shopping season:

You have to carry a credit card balance: First of all, if you find yourself needing to carry a credit card balance because you can’t pay off the bill, that might be an indication that your holiday spending was too much. If you need more than two or three months to pay off your holiday shopping credit card bill, you might have spent too much.

You dread the coming bills: If you’re already dreading the bills, even before they come, that could be a sign that you did a little too much for holiday spending. You might already be planning how to avoid seeing these bills or trying to figure out what to do about them before they even arrive.

You’re not sure you can afford rent: When you have big bills coming, you might be afraid about being able to afford your rent or mortgage payment. Scrambling to figure out how you’ll manage the housing payment (and other related costs) can be a sign that your debt has reached levels that require attention and help.

It’s fairly common to overspend during the holidays. Credit cards make it easy to spend more than you thought, and you might not be keeping close track of how much has been spent. Unfortunately, once the holiday rush is over, you could be stuck with the bills, trying to figure out what to do to tackle that holiday debt.



How to Find Relief From Holiday Overspending

When you’re overwhelmed by holiday debt, it’s time to take a step back and consider your options. There are some different approaches you can take to help you get relief from holiday overspending.


List out your debts

Start by getting an idea of where you stand. List out your debt and figure out what you owe. Depending on the situation, it might make sense to order your debts by the highest interest rate, or consider ordering them by the lowest balance. No matter how you decide to tackle your debt, create a system and figure out an order for paying down the debt.


Debt consolidation loan

In some cases, a debt consolidation loan can help you manage your obligations. By getting everything in one place, with only one interest rate and one payment, you can potentially get rid of your debt faster. A debt consolidation loan can help you better manage the situation. However, you need to be careful. Once you pay off your credit cards and consolidate them under a loan, you might be tempted to use more debt — and you could end up with even bigger problems.


Balance transfer to a low-interest credit card

If you have good credit, you might be able to qualify for a good balance transfer credit card. With a balance transfer, you move your holiday debt from your older cards, with higher interest rates, to a low-interest credit card. Depending on the credit card, you might be able to get a 0% APR for between six and 24 months. This gives you a chance to reduce your holiday debt at a faster pace since you won’t be paying interest anymore. Even if you can get a low-interest credit card deal for 3.99% or less, you can still benefit. The lower interest on a balance transfer card can make a huge difference in your ability to pay off your debt much faster.

As with the debt consolidation loan, though, you need to be careful when you transfer your balances from high-rate credit cards to one low-interest credit card. You might end up in more debt if you don’t have a plan for living within your means. Additionally, pay attention to when the promo period ends for a low-interest credit card. Once your introductory period ends, you could end up with a higher interest rate. Try to create a plan that allows you to pay off the holiday debt before your interest rate moves higher.


Debt relief

Depending on your situation, you might need debt relief. For the most part, your holiday debt is likely to be relatively small and can be handled by a debt consolidation loan or a balance transfer to a low-interest credit card.

However, if your holiday debt is part of a wider issue, and you have lots of debt and you feel overwhelmed, you might need to seek debt relief. There are some different types of debt relief to consider:

Credit counseling and debt management: With help from an accredited credit counselor, you might be able to get a lower interest rate on your debt, and get help creating a plan to tackle it. You still repay what you borrow, but a debt management plan can keep you on track and save you money through lower interest rates.

Debt settlement: With debt settlement, you negotiate a lower repayment amount with your creditors. However, it’s important to note that if you use a service to do this, you often make payments to the service, rather than creditors. As a result, you’ll miss payments and your credit score will fall. Recovering from debt settlement can be difficult, and you run the risk of being sued by creditors before you finish the program.

Carefully consider your options before choosing debt relief.


Tweak your budget to find money to put toward debt

No matter what path you take to tackle your holiday debt, it can help to tweak your budget as a way to pay down your debt faster. When you can free up money in your budget to make extra payments, you’re more likely to save money in interest and be done with the debt faster.

There are two main ways to free up money in your budget:

Cut back on expenses: One strategy is to cut back on what you’re spending. Review your expenses to see where you might be wasting money or spending on things you don’t need. Cut out the unnecessary costs and put the savings toward making extra debt payments. This can work whether you use debt consolidation, a low-interest credit card, or even if you’re in a debt relief program.

Earn more money: The other option is to increase your income. Look for ways to make more money that can be used to reduce your debt. Depending on your situation, you might be able to sell items you no longer use or get a side hustle like driving for a rideshare service or shopping for Instacart or DoorDash. If you have enough time, you might also be able to get a part-time job until you’ve gotten rid of the debt.

Consider your options. Depending on how you approach your budget, you might be surprised to discover that you have extra money that can be used to improve your financial situation.


Future Game plan for Holiday Spending

If you don’t want to end up stuck with overwhelming holiday debt again, you can create a game plan for future holiday spending. Here are 10 ideas that can help you plan for the next holiday shopping season — and years beyond that.

  1. Open a savings account for holiday spending. Create a savings account just for holiday spending. This account should be a high-yield account that you can put money. You can fund it with regular deposits, or deposit any windfalls you receive.
  2. Automatically transfer money to a holiday savings account. If you have a designated holiday savings account, consider setting up automatic transfers. Have money moved each week so that you can build up your savings and have a set amount of money ready to go for the next holiday shopping season.
  3. Plan ahead. Know how much you’re likely to spend and plan for that. For example, if you spent $1,000 during the holidays, make that your target. If you start saving in February and know you’ll want the money at the beginning of November, that gives you nine months. Try to free up $111 each month for your holiday spending account.
  4. Get a low-interest credit card. Be ready with a low-interest credit card. This can help you reduce what you pay in interest if you have to carry a balance for a month or two.
  5. Use a rewards credit card. Incorporate your regular spending into your holiday shopping. Get a rewards credit card and use it to make your everyday purchases. When you get cash back, put that money toward your holiday shopping. Just make sure you pay off the balance each month for the best results.
  6. Shop throughout the year. Rather than shopping all at once and trying to fit that extra holiday spending into your budget, buy throughout the year. Keep an eye out for items and gifts you plan to buy and snag them when they go on sale during the year.
  7. Use a list for Black Friday and Cyber Monday sales. It’s easy to get carried away with Black Friday and Cyber Monday. Make a list ahead of time and stick to it. That way you can save money on what you’re getting, without overspending.
  8. Shop the after-holiday clearance sales. Get next year’s holiday cards, wrapping paper, decorations, and other items after the holiday is over. You can get lots of great deals on clearance, saving money over getting the items during the height of the holiday season.
  9. Use gift cards. If you got gift cards you’re not likely to use on yourself, consider using them to make purchases. Additionally, you can look for discounted gift cards that can make great gifts for friends and family.
  10. Get creative. Think outside the box. Consider doing homemade gift exchanges — or even talking to friends and family about skipping the gifts altogether. You can also do a potluck for holiday gatherings, rather than buying all the food and drink. Find ways to reduce what you buy during the holiday season.


It’s never easy to deal with holiday debt, but when you plan ahead and look for ways to get the best bank for your holiday spending buck, you’re more likely to stay on top of the situation and avoid getting overwhelmed in the future.