Racking up debt this holiday season can be very troublesome. These tips will help you reduce the balance faster

By Lorie Konish -

High inflation and rising interest rates mean holiday shoppers who turned to credit cards and other borrowing methods are left with more accumulated balances this year.

Just over a third, 35% of shoppers, have borrowed so far this holiday season, up from 36% last year, according to a new LendingTree survey.

But

The majority of people — 63% — who took on debt had no plans to do so, up from 54% last year.

More than a third of buyers, 37%, will take five months or more to pay off those balances, up from 28% last year, according to LendingTree.

The online survey was conducted between December 16 and 19 and included 2,050 consumers between the ages of 18 and 76.

Rising interest rates have impacted consumer debt over the holidays.Getty Images

“It's not surprising given that the cost of just about everything has risen by the day over the past year

,” said Matt Schulz, chief credit analyst at LendingTree.

"But it's really worrying, considering how high interest rates are and the fact that they're only likely to go higher for the next few months," he added.

Even in the best economic conditions, most people have a small margin of financial error, according to Schulz.

With inflation going on, the financial room for maneuver is reduced to nothing.

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But there are five proactive steps you can take now to help reduce those balances faster and lower the total interest you pay as interest rates continue to rise.

“If you don't do anything, that debt is only going to grow,” Schulz said.

1. Ask for a lower interest rate

The annual fee equivalent—or APR—that your credit card company charges you isn't set in stone.

Often, it can be reduced simply by making the request.

According to a LendingTree survey from earlier this year, approximately 70% of credit card APR reduction requests are granted.

But the key is to request the reduction, explains Schulz.

2. Look for 0% Balance Transfer Credit Card Deals

If you transfer your outstanding credit card balance to a card that offers a 0% introductory interest rate, you may be able to go a year or more without accruing interest on your balance, Schulz said.

To be on the safe side, pay attention to the fine print, including fees, limits, and deadlines, before applying.

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“If a 0% balance transfer credit card is used wisely, it can be a very, very powerful tool against credit card debt,” Schulz said.

3. Consider a personal loan

Alternatively, a low interest personal loan may offer a lower interest rate than your current credit cards.

Personal loans usually don't offer the 0% introductory interest rate that balance transfer cards offer.

But

4. Pay attention to tax withholdings

Thomas Scanlon, a financial adviser at Raymond James Financial Services in Manchester, Connecticut, says that if he expects a tax refund next year, he may have a sizable sum to pay off his debts.

If you're expecting a large refund from the federal government or your state, also consider adjusting your withholding taxes, which will put more funds on your payroll throughout the year, he said.

In this way, you will have more money to apply to your debts.

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“This should, over time, lighten your debt load,” Scanlon said.

Be sure to do a tax projection and adjust your withholdings carefully, he said, to avoid owing money at tax time the following year.

5. Reduce your expenses

While you focus on paying off your balances, it would be wise to "freeze" your credit cards, or refrain from using them altogether, Scanlon said.

Even if you're tempted to keep charging for points or other rewards, it may not be worth it, he added.

Interest easily dwarfs the value of those rewards, especially at today's rates.