10 Ways to Recover from Pandemic Holiday Debt

5 min read
two women smiling talking around table over tea and coffee

In normal years, as a nation we tend to rack up more debt around the holidays. It was no different in 2020 as Americans took on an average $1,381 in holiday debt—reaching a 6-year high amid the pandemic. 

If you rang in the 2021 new year with more debt than you’d like, now is a great time to tackle it. Here is what you need to know to get those balances under control.  

Holiday Debt and Coronavirus

With COVID-19 still raging in the U.S., the holiday season certainly looked different than it normally would. Across the nation, many people still planned on traveling to see family, and many others wisely opted to stay home. According to Hopper’s Holiday Travel Confidence Report, 39% of people still planned on traveling around the holidays, while 21% were staying home—even though they usually wouldn’t.  

Shopping in person got trickier. Unable to safely stand in the infamous long Black Friday lines like we usually would, many retailers opted to stay closed on Thanksgiving, bring sales online, and stretch out sales holidays over several days. Meaning, you likely bought the bulk of your gifts online this year (often with shipping charges).  

And for the multitudes of people who chose to stay home and social distance with close family, decorating and buying food to prepare at home took center stage if it was financially feasible.  

How to Take Charge of Your Holiday Debt in 10 Steps

Whether you were buying gifts online, adding a little more holiday cheer around the homestead with decorations, or opting to take it easy with takeout over the holidays, the new year is the perfect time to reflect, get your finances on track and find out how to start saving more money.  

1. Know where you stand

Sit down with your (and your partner’s) financial records and take stock. Look at your last paycheck, credit balances, and bank statements. Make sure you know who and how much you owe and plan to prioritize.

If you haven’t already, this is an excellent time to review all your insurance policies: home, property and life as well as health, dental, and vision coverages. After all, you’re already working on your finances, and the New Year is a great time to start fresh.

2. Tidy up your money mindset

Getting healthier financially is easier when you cultivate a money mindset that supports your goals. Whatever your current situation—lean into it. Write it all down. Talk openly with your family about money matters.

Research shows that the state of your finances can have big effects on your quality of life. If you’ve made mistakes, forgive yourself and move on. If you’re just getting started building credit, be mindful, and remember that every financial move matters.

3. Make a budget

Make a list of your necessary expenses and payments on credit card debt and loans. Log your regular income, unemployment benefits, or any source of income you have. Check your credit card and bank statements for recurring payments and subscriptions. Cancel services you no longer use.

Don’t forget to include making contributions to your emergency fund or savings account. Even if you’re feeling cash-strapped after a difficult year, saving even a few dollars from each paycheck helps improve your personal finances and builds a stronger foundation.  

And if you’re struggling to stick to your budget after such a stressful year, know that you’re not alone. Check out common budgeting problems and other creative ways to pay off debt.

4. Stick to cash or debit

Take the credit cards out of your wallet and put them in the back of your drawer. Research has shown that people are more likely to overspend when they use credit cards. But when you have to reach for the cash to make a purchase, you’re likely to think twice.

And, of course, if you use cash, limit yourself to only spending the money you actually have. If you’re shopping online, use your debit card and check your balance often. And if you do use credit cards, pay off the balance every month so you don’t accrue interest charges.

5. Improve your financial literacy

The more you know about finances, the better choices you’ll make. Don’t beat yourself up over your credit card balances or how much is (or isn’t) in your savings account. Commit to improving your financial knowledge and learn how to make savvier financial decisions in the future.

The Consumer Financial Protection Bureau has answers to hundreds of financial questions and guides to help you understand how to plan ahead to reach your financial goals and you can also listen to some of the best finance podcasts.

6. Organize your financial records

The new year is an ideal time to set up the systems that will help keep you on track. Make paper or computer folders where you can put monthly statements for all of your accounts. Use an app or paper log to track expenses. This step alone can help you quickly understand where your money’s going.

Make cuts where necessary and redirect those funds to paying down debt balances or saving using the debt snowball method. Ask your tax preparer if they offer any free resources for documenting and recording expenses.

7. Automate your payments

Juggling many bills can be stressful. You also risk missing payments, which can hurt your credit score and lead to added fees. Calendaring or automating payments for your credit cards, student loans, and any recurring bills is one of the best ways to get your finances in order and stop living paycheck to paycheck.

If you’re worried about canceling automatic payments, or creditors making unauthorized withdrawals, read about your rights. And if your financial planning includes having a retirement account, like an IRA, automating contributions to the account minimizes the temptation to skip them.

8. Consolidate your debt

If you have balances on high-interest credit cards or if you’re juggling lots of bills, consider consolidating your debt with a personal loan. Depending on your income and credit profile, you could get a lower interest rate that would help you save money over your repayment period.

You might also be able to lower your monthly payment to add some breathing room in your personal finances. Remember that consolidating credit card debt only helps your finances if you avoid making new purchases on those cards.

9. Take stock and look ahead

Last year was a whirlwind. You likely faced some unexpected challenges, both financial and in your personal life. While last year’s financial plans may have understandably gone out the window, you can use this time to reflect and prioritize in 2021.

For example, if you’re one of the millions of people still looking for work, or if you’ve decided not to return to the workforce full-time, take some time to decide how going from a dual-income to a single-income household will work for your family. On the other hand, if you’d like to find a job (or switch careers) this year, make an action plan for seeking out new opportunities.  

COVID-19 will be with us a little while longer, but hope is in sight. Set your plans in motion now to set yourself up for a fresh start in the new year.  

10. Plan ahead for next year’s holiday season

It may feel a long way off right now, but you can start saving now for next year’s celebrations. Take a look at how much you spent this holiday season (during the months of November and December). Consider ways you could have saved, then project the amount you’ll spend next year. Divide that number by 12 and add that dollar amount to your monthly budget.

Create a separate holiday savings account or use a bank that lets you divide your bank account into subaccounts. By the end of next year, you will have saved up a nice sum and less likely to rely on credit cards once the holiday season rolls around.

The Bottom Line

Don’t let holiday debt get you down. Be determined and continue to incorporate financial self-care habits that improve your situation. Making just a few small changes can help you know how to get your finances in order and set the stage for a more relaxed start to the new year.

If you owe holiday bills, consider checking your rate and personal loan eligibility through LendingClub and start taking control today.

Check my rate

You May Also Like

Related Resource Center
Sticking to a budget can be challenging, but having a clear goal and rewards can help you stay on track.
Jun 27, 2024
4 min read
Person in blue shirt sitting at desk with notebook, laptop and phone
Are you making only minimum payments on multiple credit card and other debt balances? If you’ve got a bit of extra cash earmarked for debt repayment and need a little motivation to start paying those balances down, now could be just the right time to consider putting the debt snowball method into action.
Jun 26, 2024
8 min read
Having a money plan in place before you turn in your resignation can make the transition smoother. Learn ways to prepare your finances before you go.
Jun 25, 2024
5 min read
Young man relaxing in an orange hammock by a misty lake holding a cup of coffee, looking at laptop on his lap.
Soft inquiries won’t impact your credit scores, and hard inquiries can hurt your scores slightly. Here's what you need to know.
Jun 25, 2024
7 min read
woman on mobile phone image
A recent survey shows 60% of U.S. adults, including more than four in 10 high-income earners, are living paycheck to paycheck. How can we all get to a place where we’re empowered with our money?
Jun 25, 2024
5 min read
Related Impact
From groceries and diapers to Halloween costumes for pets, nearly 60% of American consumers prefer to shop online for everyday items that make life more convenient, comfortable, and enjoyable. And with rising prices showing no signs of stopping anytime soon, we’re pleased to introduce StackitTM from LendingClub Bank—a new browser extension that automatically finds and rewards eligible members with coupons and cash back for extra savings at more than 15,000 favorite online retailers.
Nov 13, 2022
2 min read
blog header stackit 765x430 v1-1
Even in today’s low-yield, high-inflation environment, it’s essential to keep a certain amount of money in an easy-to-access checking or savings account for things like daily household and emergency expenses, or to meet short-term financial goals.
Oct 2, 2022
5 min read
LendingClub Rewards Checking Nationally Certified as Trusted, Afforda
Since 2007, LendingClub has been on a mission to deliver a world-class experience to all our members. This month we took a moment to reflect on the more than four million members who have chosen LendingClub as their partner to help them reach their financial goals.
Apr 19, 2022
2 min read
Illustration of large number 4 and letter M made up of colorful, tiny illustrations of ethnically diverse people
In March 2022, we hosted our first quarterly webinar where we celebrated our one-year anniversary as a digital marketplace bank. 
Mar 6, 2022
less than a minute read
LendingClub completed the acquisition of Radius Bank in February 2021. At that time, in addition to the direct-to-consumer deposit business, we inherited a fintech partner program, and several lending businesses. As we reach the one-year anniversary of the acquisition, and in conjunction with the conclusion of a strategic review of our business operations, we have made the decision to discontinue certain businesses that don’t fit our mission.  
Jan 2, 2022
2 min read
Man in blue button up shirt and glasses smiling
Related FAQ's
We offer several ways for you to make your monthly auto loan payment, so you can choose the method that works best for you. A statement will be mailed to you every month that shows the payment amount and due date.
Nov 29, 2023
less than a minute read
LendingClub provides a year-end statement that summarizes your account activity, including how much interest you’ve earned and information regarding Notes tied to loans that have been charged off.
Jun 7, 2023
less than a minute read
Adding creditors to your balance transfer loan is easy.
Jun 7, 2023
3 min read
To qualify for a lending product with LendingClub Bank, you must...
Jun 7, 2023
less than a minute read
Applying for a lending product is fast, easy, and confidential.
Jun 7, 2023
less than a minute read
Related Glossary
{noun} A type of credit that allows the borrower to make charges and payments against a set borrowing limit, paying interest only on outstanding balances.
Sep 6, 2023
4 min read
{noun} The total annual cost to borrow money, including fees, expressed as a percentage.
Mar 21, 2023
3 min read
{noun} The amount of unpaid interest that has accumulated as of a specific date, either on a loan or an interest-bearing account or investment. 
Mar 21, 2023
4 min read
A debt that is written off as a loss because the financial institution or creditor believes it is no longer collectible due to a substantial period of nonpayment.
Feb 7, 2023
3 min read
{noun} An interest rate that remains the same for a set time, usually for the life of the loan.
Feb 4, 2023
3 min read

LendingClub Bank and its affiliates (collectively, "LendingClub") do not offer legal, financial, or other professional advice. The content on this page is for informational or advertising purposes only and is not a substitute for individualized professional advice. LendingClub is not affiliated with or making any representation as to the company(ies), services, and/or products referenced. LendingClub is not responsible for the content of third-party website(s), and links to those sites should not be viewed as an endorsement. By clicking links to third-party website(s), users are leaving LendingClub’s website. LendingClub does not represent any third party, including any website user, who enters into a transaction as a result of visiting a third-party website. Privacy and security policies of third-party websites may differ from those of the LendingClub website.

Savings are not guaranteed and depend upon various factors, including but not limited to interest rates, fees, and loan term length.

A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $19,584 for a term of 36 months, with an interest rate of 10.29% and a 6.00% origination fee of $1,190 for an APR of 14.60%. In this example, the borrower will receive $18,663 and will make 36 monthly payments of $643. Loan amounts range from $1,000 to $40,000 and loan term lengths range from 24 months to 60 months. Some amounts, rates, and term lengths may be unavailable in certain states.

For Personal Loans, APR ranges from 9.57% to 35.99% and origination fee ranges from 3.00% to 8.00% of the loan amount. APRs and origination fees are determined at the time of application. Lowest APR is available to borrowers with excellent credit. Advertised rates and fees are valid as of July 11, 2024 and are subject to change without notice.

Checking a rate through us generates a soft credit inquiry on a person’s credit report, which is visible only to that person. A hard credit inquiry, which is visible to that person and others, and which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. Credit eligibility is not guaranteed. APR and other credit terms depend upon credit score and other key financing characteristics, including but not limited to the amount financed, loan term length, and credit usage and history.  

Unless otherwise specified, all credit and deposit products are provided by LendingClub Bank, N.A., Member FDIC, Equal Housing Lender (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. Credit products are subject to credit approval and may be subject to sufficient investor commitment. ​Deposit accounts are subject to approval. Only deposit products are FDIC insured.

“LendingClub” and the “LC” symbol are trademarks of LendingClub Bank.

© 2024 LendingClub Bank. All rights reserved.