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Make a plan now to deal with holiday credit card debt. Here are four tips to follow.

By Aimee Picchi, Special to USA TODAY

Corrections & Clarifications

An earlier version of this story incorrectly implied that personal loans from Marcus and SoFi have fees.

After this year’s holiday parties and gift exchanges are over, millions of Americans will face a day of reckoning when their credit card statements arrive .

It’s not an uncommon experience, with personal finance site Credit Karma finding that one in four Americans slip into debt over the holidays. And the damage can be significant: Shoppers with holiday bills racked up an average of $1,230 in debt last year, finance site MagnifyMoney found in a 2018 survey.

“We've called it a holiday hangover,” says Dana Marineau, a financial advocate at Credit Karma. “Social media is adding a lot of pressure to show off lavish purchases and vacations,” which increases the risk of overspending.

Holiday debt can linger for months, straining your household budget and even limiting your ability to save for retirement and other goals, experts say. That’s why it is important to get a handle on your debt as soon as possible and devise a plan for paying it down, says Emily Holbrook, senior director of planning at Northwestern Mutual.

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“The first step is to acknowledge it and to ensure you have a good grip on the reality of the situation,” Holbrook said. “You have to look at the debt you have and what are the interest rates.”

Below are four tips for digging yourself out of holiday credit card debt.

Snowball or avalanche?

If you’re motivated by small wins, you may want to opt for the snowball method of debt repayment. This strategy prioritizes paying down your smallest credit card balance and then tackling bigger balances. For instance, if you have two cards with balances of $200 and $700, respectively, you would pay down the card with the $200 balance first.

“It's about gathering momentum,” says Ted Rossman, industry analyst at CreditCards.com. “For me, a lot of debt management is psychological. I do really like the idea of checking things off the list and getting some quick wins.”

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The avalanche method, by comparison, prioritizes repaying credit cards with the highest interest rates. If you have a card with an average APR of 21% and another at 17%, you would prioritize paying down the card with the 21% rate. With this approach, you’ll whittle down your high-interest payments, saving money in the long run.

Balance transfer card

Balance transfer cards can give you more time to pay down your debt while sidestepping interest payments. Typically, these cards will offer a zero-percent interest rate for at least 12 months.

“You can get them for as long as 21 months with no interest,” Rossman says. “This is a tremendous savings. Forget about rewards – prioritize your debt repayment.”

But don’t neglect the fine print. Generally, these cards charge a balance transfer fee ranging between 3% to 5% of your balance. On a $1,000 debt, that could range from $30 to $50.

And after the promotional period ends, the card’s APR could jump to anywhere from 14% to 28%, depending on your credit score. That should be an incentive to pay down your debt before the intro period ends, Rossman adds.

Personal loans

Another option is a personal loan, which can have rates in the low single digits, although your rate will depend on your credit score, Rossman notes.

There are plenty of options available from fintech firms such as SoFi as well as banks like Goldman Sachs, which offers personal loans through its Marcus division. But while personal loans from Marcus and SoFi don't have any fees, other personal loans can carry origination fees – on top of the interest you’ll be paying – and can also include gotchas like prepayment penalties. That why it’s important to do your research.

Reassess your budget

January is a good time to weed out unnecessary expenses from your budget, recommends Laura Beattie, a stay-at-home mother who blogs about family finances at SavvyFamilyFinace.com .

Beattie, based in Portland, Oregon, says she avoids holiday debt by setting expectations and maintaining a savings cushion to handle unexpected expenses, strategies recommended by financial experts. She also says she sets gift guidelines for her teenage children, asking them for gift suggestions below $100.

“Then you aren't stressed come January and February,” she notes. “You’ll have more time to do fun things with them.”

This article originally appeared on USA TODAY: Credit card debt: Tips for paying off holiday spending bills