How to avoid the holiday debt hangover

With the economy slowing, layoffs increasing, and tariffs and inflation taking a bite out of budgets, many households are looking to trim spending this holiday season.

But there’s one area where consumers are unwilling to cut back: Travel.

That’s because 44% of Americans report they are hitting the road for the flurry of upcoming holidays like Thanksgiving, Christmas and Hanukkah, according to a Holiday Outlook survey by consultancy PwC. Among Gen Z and Millennials those numbers rise even higher, with 55% planning to hop onto planes, trains and automobiles.

Drill down into spending numbers, and you see just how unwilling people are to give up their trips. While the total holiday-related price tag is slated to dip to $1,552 per person, and spending on gifts is plummeting by 11%, travel budgets are actually up by 1%.

Understandable, perhaps, after those lonely pandemic years. But there’s a danger here: An end-of-year splurge on travel can haunt your 2026 budget for months. In fact 36% of people report still struggling with holiday-related debt from last year, according to a new Consolidated Credit survey.

The smart approach is to develop a strategy before the holidays even hit. That way you can maximize any card rewards you have, minimize cost outlays, and prevent debt from traveling into 2026 with you.

A few tips:

-Be strategic about when you book. With so many holidays taking place in quick succession, it can be challenging to plan it all out in advance. But if you are scrambling at the last minute, odds are you will have to take whatever pricey fares you can find – if you can find anything at all.

So lock in what you can, as soon as possible. According to the travel platform Skiplagged, the “sweet spot” for Christmas bookings is two weeks in advance, before fares start getting squeezed higher and higher. 

The cheapest days to fly: The Monday before Thanksgiving (Nov. 24), or Wednesday Dec. 24, if you don’t mind cutting it that close to Christmas. The most expensive, in contrast, are the Saturday before Thanksgiving (Nov. 22) and Saturday, Dec. 20.

-Attack debt in advance. If you know those travel costs are coming, the worst strategy is to put it all on credit cards at 20% interest rates (the national average for credit cards), at which point the bill could spiral out of control -- and harm your credit record, if you’re not able to keep up.

The savvier approach is to take pre-emptive action, by saving as much as you can before you get on that plane so you’ll want to look for a financial institution where you receive the highest savings rate so that cash also has a chance to grow. Many mobile-only financial apps or online-only banks offer rates significantly higher than traditional banks. At Current, members can earn up to a 4.00% bonus on money in their Savings Pods. And to really get a jump on next year’s holidays, start putting your money in higher-earning places for 2026 as well.

-Beware of fees. It’s well-known how much big banks and credit-card companies love fees, which provide a juicy revenue stream at the cost of consumers’ bank accounts. So if your holiday travel plans are international, pay special attention to those additional charges -- which you might not even be aware of, and can make a bad situation worse. 

“When traveling abroad, make sure the card you use doesn’t charge foreign transaction fees,” advises Tanner Merritt, a financial planner with Life Planning Partners in Jacksonville, Fla. “Those fees get added every time you swipe and can add up fast, especially on big purchases like hotel stays. It’s always worth double-checking before your trip.”You’ll also want to look for a spending account that does not charge overdraft fees (and/or has overdraft protection) and also offers fee-free ATMs. At Current, no one is ever charged an overdraft fee and qualified members can access up to a specified amount of fee-free overdraft protection. Members also have access to over 40,000 fee-free ATMs.

-Maximize rewards. If you’re like most people, you likely have a few different credit cards and a few different rewards programs. Now is the time to cash in, to help you avoid inflated fares around the holidays.

“With a little planning, your credit card can be a money-saving tool rather than a debt trap,” says Mike Casey, a financial planner and president of AE Advisors. “Start by reviewing which card offers the best travel rewards or cash back, then use that card strategically for flights, hotels, or gas. Many cards offer bonus points for booking through their travel portals or for spending in specific categories, so focus your spending where it earns the most.”

More tips: Double down on maximizing your cards, by checking if they throw in valuable add-ons like trip cancellation insurance or rental-car coverage. Says Casey: “The key is to enjoy your holiday trip, without letting the memories linger on your credit statement well into the new year.”