You tried real hard, but — whoops! — you got a ton of credit card debt due in January. It happens. The holidays are so extra. Starting the new year off with balances you can’t pay off in full? Not so much. Fortunately, there are ways to hightail it out of the red. Here’s how to pay off your holiday debt.
Get your credit card annual percentage rates (APRs) as low as they can go by (a) negotiating with the issuer and/or (b) getting a new card with a 0% introductory APR promo. These offers let you transfer high-interest credit card debt onto a new card that won’t accrue interest for anywhere from six to 21 months. That transfer usually costs a fee (3% to 5% of the balance), but there are a few cards that waive it on transfers made within the first 60 days of opening the account.
Once you’ve got your APRs sorted, it’s time to debt-stack, aka debt avalanche. Make all your minimum payments, but put as much money as you can toward the card with the highest APR. That keeps your debt from avalanching — see what they did there — and helps pay debts down faster.
Psst: You’ve probably also heard of the debt snowball method, which involves prioritizing your payments by lowest to highest credit card balance. That strategy can certainly make you feel good — one debt down; five to go! — but it won’t save you on interest. So, FWIW, debt stack for the win.
3. Put your Christmas bonus to work
Kickstart your debt avalanche by putting a chunk of your Christmas bonus — or a similar windfall — toward that highest-interest balance. Everyone should have a rainy day fund, so we get not draining your coffers completely. Just keep in mind, thanks to the low-interest rates on savings accounts, most people come out ahead mathematically by getting out of high-interest credit debt before investing or bolstering savings.
At the very least, hold off on that trip to Tahati.
High credit card balances are bad for your credit score. (Rule of thumb says stay below at least 30% of your credit limits for best results.) So are missed payments. In fact, those are worse — and not just point-wise. Your credit score recovers from sky-high credit card debt almost as soon as its paid off, but a skipped due date takes seven years to age completely off your credit report. Preclude double-damage by setting minimum payments to auto-pay and paying down more debt as you can.
This article originally appeared on Policygenius