Many American Families Are Starting the New Year Buried in Credit Card Debt from the Holidays

Many Americans leaned on credit cards to get their families through the holiday season — and many are now staring down months of repayment.

Higher prices pushed more than one-third of U.S. consumers into holiday debt this year, according to a new LendingTree survey. Those shoppers added an average of $1,223 to their balances, up from last year. For parents, the number climbed even higher, to $1,324.

For Hillary Lanier, a 32-year-old production planner in Charlotte, North Carolina, holiday spending has become a familiar cycle. Each year, she puts gift purchases on credit — and spends most of the following year paying them off.

This season was worse.

Across four credit cards, Lanier says her balance has climbed into the five figures. Rising prices made it harder to stick to her budget, even though she tried to keep spending in check. Buying gifts for family, friends, and coworkers added up quickly.

“It’s definitely higher prices,” she said. “I’ve tried to be conscientious, but it’s a very vicious cycle.”

Lanier estimates it will take nine to 10 months to pay off what she charged — just in time for the next holiday season to begin again.

She’s far from alone.

Debt lingers long after the decorations come down

LendingTree found that 63% of holiday borrowers expect it will take at least three months to pay off what they owe. More concerning, 41% are still paying down last year’s holiday debt.

That lingering debt is costly. Credit card interest rates now average over 20%, according to Bankrate, meaning balances that stretch out over months — or years — can balloon quickly.

“Carrying a month or two of holiday debt is no big deal,” said Matt Schulz, LendingTree’s chief consumer finance analyst. “But when it stretches to six months or longer, it becomes significant because of how high interest rates are today.”

A widening gap between spending and confidence

Even as shoppers spent freely, confidence in the economy continued to erode.

The Conference Board’s Consumer Confidence Index fell to 89.1 in December, its lowest level since April, when Trump’s tariffs took effect. Expectations for the future remain well below levels that typically signal economic stability.

Yet consumer spending tells a different story.

Spending grew 3.5% in the third quarter, and the National Retail Federation expects holiday sales to top $1 trillion for the first time in 2025, rising as much as 4.2% from last year.

The disconnect is striking: Americans are worried about their finances — but still spending more.

Credit card balances keep climbing

That spending is showing up in household debt.

The average U.S. consumer now carries $6,523 in credit card debt, according to TransUnion, up more than 2% from a year ago. Other data shows balances continuing to rise through November, suggesting many households are using credit cards as a financial lifeline rather than a convenience.

As prices stay high and wages struggle to keep pace, more Americans are turning to debt to maintain traditions — even when they know the bill will come due later.

How to Pay Down Debt When the Economy Feels Broken

If you’re coming out of the holidays buried in balances, you’re not alone — and there are ways to make progress without burning out.

1. Stop the bleeding first

Before attacking old debt, pause new charges.

• Temporarily lock cards in your app or remove them from digital wallets

• Switch to cash or debit for everyday spending

• Even a short reset can prevent balances from snowballing

2. Focus on interest, not emotions

Paying off small balances feels good, but high-interest debt costs more.

• List cards by interest rate

• Put extra money toward the highest-rate card first

• Pay minimums on the rest

(This is the “avalanche” method — slower emotionally, faster financially.)

3. Call your credit card company

It’s uncomfortable, but it works more often than people realize.

• Ask for a temporary interest rate reduction

• Request a fee waiver or hardship program

• Mention inflation, tariffs, or cost-of-living pressures — issuers expect it

4. Consider a balance transfer — carefully

A 0% intro APR card can help if you have a plan.

• Only transfer what you can realistically pay off before the promo ends

• Avoid using the old card afterward

• Watch for balance transfer fees (usually 3–5%)

5. Create a “debt-only” windfall rule

Tax refund? Bonus? Cash gift?

• Commit beforehand to putting at least 50% toward debt

• This prevents the money from disappearing into everyday spending

6. Adjust expectations, not just budgets

In a high-price economy, perfect budgeting isn’t always realistic.

• Scale back next year’s holidays now — even slightly

• Suggest gift exchanges, spending caps, or fewer recipients

• Protect future-you from repeating the cycle

7. If it’s overwhelming, get help early

If balances feel unmanageable:

• Look into nonprofit credit counseling agencies

• Avoid for-profit “debt relief” companies that promise miracles

• Early help is far less damaging than waiting until accounts fall behind