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People connecting with loved ones, providing others with much-needed relief, and exercising greater generosity make the holiday a joyous time for so many.
Research has shown, however, that year-end activities create the most financially exhaustive period of the year, with multitudes engaging in overspending or being overwhelmed by debt. Data shows more than 30% of consumers endured debt this past holiday season.
Factors That Contribute to Greater Holiday Overspending
With the new year, those consumers could face the challenge of coping with those balances, which in many cases can wreak havoc on credit and finances and could extend throughout 2025. The compulsive spending reportedly came as credit card balances ballooned to new levels.
Financial challenges can emerge during winter months as even large segments of consumers bust even the most disciplined budgets. That urge to splurge can stem from a range of scenarios, including increased spending on family and friends to impulse buying driven, in part, by a social media push that leads to meeting gift-giving expectations.
Multiple moves can be applied to reduce and avoid a series of post-holiday financial dilemmas in 2025. To learn strategies to restore finances and stay on track for the new year, BLACK ENTERPRISE spoke with Omari Hall, the innovation and diversity strategy leader at GreenPath Financial Wellness.
A certified credit counselor for the National Foundation for Credit Counseling or NFCC, GreenPath seeks to help people understand their options related to their finances, including budgeting and credit. The NFCC calls itself the oldest nonprofit geared to financial well-being, helping with credit cards and other debt.
Steps To Manage Holiday Debt
Hall offered several approaches to help individuals manage major budget and debt aftershocks. He provided practical steps that could prove helpful regardless of their financial state. In fact, some extreme measures called for repairing debit and credit accounts to bring them under control if needed. He stressed that individuals should not feel guilty or ashamed about having to take such action.
Specifically, Hall suggested taking preventive action from the start. At the top of his list, he suggested that people should set a holiday budget and stick to it to prevent financial problems from recurring—more advice: Conduct an honest assessment of your overall holiday expenses.
“Get a true estimate of how much money you have actually spent. And it shouldn’t be too hard. One of the nice things about technology is it makes it really easy for us to pull up our receipts, our bank statements, all that stuff. Take inventory of the extent to which you maybe overspent.”
Hall says that the move could put your financial status into perspective and provide alternatives for the future. He also shared that consumers often overspend after receiving year-end financial windfalls like holiday bonuses.
“But even if you did overspend in a way that maybe takes you by surprise, it’s better that you understand that surprise early, then a few months down the line where it starts to cascade into other problems, and then you start missing other payments.”
Be Aware of The Impact of Unwise Spending on Your Credit Score
Moreover, Hall discussed the value of understanding the differences between debit and credit card usage. He said most people will likely do more overspending with credit cards. The reason: “There is only so much you can spend on your debit card, and you will know how much that is. With credit cards, he stressed, you are borrowing against a credit line that must be paid later with interest, making it easier to fall behind with credit cards and easier for consumers to overspend. He asserts: “That is especially true when the minimum payments start rising and you begin to maybe miss payments.”
Hall further suggests looking at what that can potentially do to your credit score. He explained that if your credit balance is more than 30% of the credit limit, that’s when cardholders run into problems. He says that damage is being done if you’ve overspent on your credit cards and they’re maxed out.
“It’s much more advantageous in the long run to close out those credit card accounts, lower the interest rates significantly, and embrace a consolidated repayment plan with the express goal of paying off that debt efficiently so you can get out of that hole and move on with your financial journey.”
Tap Into Resources to Get Help Managing Credit Card Debt
However, Hall added there are an array of options to help you get out of credit card debt. For instance, he says GreenPath and many other credit counselors or NFCC-certified credit counselors have debt management programs that can assist you.
Generally, a good credit score can make getting approved for loans and credit cards easier and secure them at better rates. The bottom line: Strong credit can show lenders and others that you pay your bills on time, demonstrate you are good at managing your money, and not a risky bet.
“If your credit cards have truly gotten to a point where you really need help managing them, our debt management program is an opportunity for us to reach out to the credit card companies on your behalf and use the relationships that we have with them to negotiate much lower interest rates so that you can pay off those debts much more effectively.”
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