By Joshua Pena, Bank of America
The holiday season was full of joy, but consumers this year also felt the pressure of rising prices, packed calendars, and higher interest rates. According to the Bank of America Institute’s 2025 Holiday Survey, 62% of respondents reported feeling financial strain this season, underscoring the importance of having a clear plan to manage any extra debt now that we are entering the new year.
Below are simple, effective strategies you can use to pay down holiday debt and stay financially grounded after the holiday season.
Pick a debt strategy you can stick with
When it comes to paying down debt, consistency matters more than perfection. Choose the method you’re most likely to maintain month after month, not just the one that looks best on paper.
If small wins keep you motivated, try the Snowball Method
The Snowball Method focuses on paying off your smallest balances first. Each payoff gives you a burst of momentum and makes it easier to stay committed during the post-holiday payoff period.
If long-term savings are your priority, use the High-Rate Method
The High-Rate Method tackles your debts with the highest interest rates first. This approach helps you get out of debt sooner and spend less overall, especially helpful when interest rates remain elevated.
Always pay minimums first, no matter what
Regardless of the method you choose, make minimum payments on all debts, then apply any extra dollars to your target balance. When a card is paid off, roll that payment onto the next card. Over time, this creates the “snowball effect” or accelerates interest savings under the High-Rate Method.
