If you’re already in debt, or inflation has left your budget tighter between paychecks, overspending through the holidays could be a huge setback for your personal finances.

But it doesn’t have to be — You can preempt the worst consequences of holiday debt and avoid mounting high-interest charges this season with the help of a great balance transfer credit card offer.

Using a balance transfer credit card for holiday debt

Balance transfer credit cards allow you to pay down your principal balance at 0% APR (annual percentage rate) over a promotional period.

If you’re considering a balance transfer to help combat your holiday spending, follow these steps to maximize your repayment period — and get ahead of next year’s holiday shopping season.

Take stock of your credit card debt

Before you can eliminate your debt, you need to know where you stand.

Start with your credit card statements, bank account statements, receipts, or other spending records over the past few months. Compare those totals to the amount of money you expect to bring in before your payments are due — such as regular paychecks, monetary gifts, or expected holiday bonuses. There are two main things you’re looking for:

• Total debt balance: Find out exactly how much you need to pay off and whether you need to consolidate debt from multiple cards. If you have a large total, you’ll want to look for a card with a longer intro period and higher potential credit limit. Otherwise, you may have more card options with slightly shorter introductory offers.

• Monthly payment budget: This is the amount you can afford to put toward your debt each month. If you can only dedicate a small amount on top of your regular monthly expenses, a longer 0% APR period may be necessary. If you have a significant sum to put toward the balance each month, you might prefer paying off your debt in larger chunks over a shorter amount of time.

Check your credit score

While you take stock of your debt, also take some time to check your credit score and credit report.

This can help you determine what type of balance transfer card you can qualify for — or if you need to improve your score before applying. Many balance transfer credit cards require good-to-excellent credit to get approval, or a credit score of at least 670.

Your credit report, too, can be a great resource to check in on your overall financial situation. Make sure all of your existing accounts are accounted for, and look for any potential mistakes or fraudulent activity on your report that could negatively impact your credit score.

Choose the right balance transfer credit card

Finding the right balance transfer credit card may be one of the most important steps in the process. Here are a few options to consider, depending on how long of an intro period you need and how you plan to use the card longer-term:

If you want a long 0% APR period

The cards below carry some of the longest introductory 0% APR offers on balance transfers available today. Aside from the long intro offers, they don’t have many ongoing rewards or benefits, and carry no annual fees (though a balance transfer fee will apply).

• Wells Fargo Reflect® Card: 21 months of 0% APR on qualifying balance transfers (17.49%, 23.99% or 29.24% variable APR thereafter)

• Citi® Diamond Preferred® Card: 21 months of 0% APR on balance transfers (17.49% - 28.24% variable APR thereafter)

• BankAmericard® credit card: 21 billing cycles of 0% APR for balance transfers made within 60 days of account opening (15.49% - 25.49% variable APR thereafter)

• Chase Slate Edge®: 18 months of 0% APR on balance transfers (19.74%–28.49% variable APR thereafter)

If you want long-term rewards

In addition to introductory balance transfer offers, these cash-back rewards credit cards can offer great value on your everyday spending. However, you may sacrifice a few extra months with 0% APR to earn rewards and other long-term benefits.

• Capital One Quicksilver Rewards Credit Card: 15 months of 0% APR on balance transfers (19.74% - 29.74% variable APR thereafter)

• Chase Freedom Unlimited: 15 months of 0% APR on balance transfers (19.74% - 28.49% variable APR thereafter)

• Blue Cash Everyday® Card from American Express: 15 months of 0% APR on balance transfers (18.49% - 29.49% variable APR thereafter; see rates and fees)

Figure out your repayment plan

Here’s what your debt repayment plan may look like, depending on how much debt you owe and which balance transfer card you choose.

If you’re paying down holiday debt

This year, Americans predict they’ll spend $923 on average for holiday gifting, according to a recent poll from Gallup — though 35% say they’ll spend $1,000 or more.

Let’s say you take on around $1,000 in debt over the holiday shopping season. Combined with other bills and regular expenses, you’re unable to pay that amount in full by the time your statement balance is due.

Luckily, a debt balance under $1,000 isn’t going to result in too high of a monthly payment across a 0% APR introductory period, and even the balance transfer fee will add only a small sum to your balance due. Here’s what your payoff may look like if you open a card with 0% APR on balance transfers for 15 months and a 3% balance transfer fee:

If your holiday spending added to existing debt

Of course, this scenario could look much different if you were already in debt before taking on more over the holiday season. For example, say you have an existing debt balance of $6,000 — just over the current American average, according to data from Experian. Then, you take on an additional $1,000 over the holidays. That’s a total $7,000 balance.

With this large of a total, you’ll need to pay more each month to eliminate it in full over any new card’s intro period. But even if you can’t dedicate the full monthly payment, you can still get ahead of high interest.

In the example below, see what you could save using a card with a 21-month introductory 0% APR and 3% balance transfer fee. First, by paying the balance in full over the intro period, then compared with a fixed monthly payment of $200 before the regular 20% interest rate kicks in:

Find out more about how much you can save with a balance transfer

Pre-plan ahead for holiday spending

If you know that you tend to go over your budget year after year during the holidays, take steps over the next several months to prevent the cycle from starting again in 2024.

Here are some actions you may want to consider:

Shop with a 0% APR card

Rather than working backward with a balance transfer, a card with 0% APR on new purchases could give you some extra time to pay off your spending before it ever starts to accrue interest.

The intro periods for 0% interest credit cards tend to be about the same as balance transfers, so look for one that makes sense with your budget and how quickly you expect to pay down your holiday spending.

Also like balance transfers, these cards tend to require a good credit score to qualify — especially if you want a rewards credit card with great benefits and an introductory 0% APR. If you need to work on your credit to qualify for a competitive 0% APR card, now is the perfect time to start making timely payments in full each month, keeping your credit utilization low, and practicing other good credit habits.

For example, a card like the Blue Cash Preferred® Card from American Express (see rates and fees) can help you earn cash back on both everyday spending and gift purchases you’re planning to make — but it won’t charge interest on those purchases for several months after opening. This card has a $95 annual fee (waived for the first year) and a 0% intro APR on purchases and balance transfers for the first 12 months after account opening. The ongoing APR after that is a variable 18.49% - 29.49%.

You’ll earn cash back* on your spending at the following rates:

• 6% at U.S. supermarkets (up to $6,000 in spending each year, then 1%)

• 6% on select U.S. streaming services

• 3% at U.S. gas stations and transit

• 1% on everything else
  *Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout

Save money throughout the year

If you know you tend to spend more during the holidays, set aside some cash for the rest of the year to create a buffer to help keep you out of debt. You can save the money over the next 12 months, then use it to pay down your holiday purchases next year.

Let’s use the $923 average as an example. To save that much in one year, you would need to put away about $77 per month. If you get paid on a biweekly cycle, that’s about $38.50 per paycheck in a dedicated savings account.

Even better — if you open up a high-yield savings account for your holiday savings, you could earn upwards of 3% to 4% on your savings, increasing your total holiday budget even further.

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