The holidays are a perilous time for the nation’s credit card holders. This year, the stakes feel higher than ever.

America faces a crushing credit card burden. The nation’s collective card balance stands at a record $1.08 trillion, as of the end of September. The average interest rate has hit 21%, the highest figure recorded by the Federal Reserve in nearly three decades of tracking.

And now, the holidays are here. Thanksgiving ushers in the season of giving – and spending. The average holiday shopper expects to spend $1,652 this year, Deloitte reports, a bigger splurge than in any of the last three years.

Much of the tab will go on cards. In an October survey of 1,036 consumers by CardRates.com, 38% of respondents said they plan to carry holiday credit card debt into the new year.

Other Americans are determined to cut back. 

Learn more: Best credit cards of 2023

Angela Davis, 31, of Detroit is working with credit counselors to pay off $19,000 in card debt. This holiday season, she plans to keep her remaining cards under wraps. She hopes her loved ones will understand.

“I don’t know what their plans are,” she joked, “but I’ve already made it clear that I’m not spending no money.”

Her prudence comes even as more Americans fall behind on credit card payments, with the delinquency rate at nearly 3%, its highest point in more than a decade.

Credit counseling services are seeing a steady uptick in new clients, especially Gen Zers and millennials. At the credit counseling nonprofit Money Management International, the average new client comes in with nearly $30,000 in unsecured debt, the category that includes credit cards, up from about $20,000 at the start of 2022.

Credit counselors usually get less busy around the holidays, as consumers stop trying to manage their debt and double down on spending. This year is different.

“We’ve actually seen a continued acceleration of people reaching out,” said Thomas Nitzsche, senior director of media and brand at the counseling service.

Here are the stories of six Americans who are battling credit card debt:

Christmas shopping in summer

The holidays are a stressful time of the year for Alyssa Barnhart.

The 30-year-old said she started to get into credit card debt around 2011 after a short stint with Mary Kay had her purchasing over $1,000 in products she struggled to sell.

Initially, she used the card mostly for groceries or emergencies, with a few “dumb decisions,” Barnhart said. But she was able to make her minimum payments, and her credit card company slowly began to push up her limit from $3,000 to $9,000. 

Things began to spiral last summer, when Barnhart’s landlord in Bozeman, Montana, kicked her and her boyfriend out of their home to sell the property.

“We lived in a camper for four months, and that was really hard. I started to use my credit card because life was hard and you panic,” she said. “So, I unfortunately maxed it out.”

Suddenly, her monthly $500 credit card payments were no longer feasible, especially after inflation pushed up prices for essentials like gas and groceries and the pause on student loan payments ended.

The winter months have been especially tough, she said. It’s the slower season for Barnhart’s landscaping work, which meant she had to take two or three extra jobs and work seven days a week during the cold months in recent years. Now that she’s been promoted and has a 12-month salary, Barnhart said she’s in a better position this year. 

Still, she said she tends to start Christmas shopping in the summer to avoid splurging too much money at once in December. Barnhart said she and her boyfriend have had to penny-pinch to pay off their debts, and simple things like going out to dinner or a movie are no longer affordable.  

And her concerns go beyond day-to-day needs.

“I may not ever be able to own a home,” she said. “I can’t really save the money for a down payment or anything like that because all of my money is going to these credit cards and bills and rent.”

Bailey Schulz

No presents in the budget

Evan Charon, 24, of Cedar Rapids, Iowa, says Christmas presents are out of the budget this year. 

Charon has nearly $22,500 in debt spaced across six credit cards. He blames some “pretty bad” spending habits after he got his first one at 18, which he used for various food and travel expenses.

Then things began to snowball as the cost of living rose and he was charged roughly $3,000 in medical procedures to address an eye condition. 

Now, he’s working to pay it off. In addition to his full-time job as an accountant, Charon works up to eight hours a week with autistic children for $15 an hour. He’s cut back on spending by giving up on extracurricular activities and subscription services like Netflix, and he shops for food at discount grocery stores. 

The one thing he’s not cutting out is his trip to visit family on the East Coast for the holidays. As for gifts, though, he said this will be the third year in a row he’s unable to afford presents. 

“I think it’s something that can bring a lot of shame if you’re not careful,” he said.  

In total, he puts more than $600 toward his credit cards each month. Another $600 goes toward paying off student loans, and he’s on a payment plan with a hospital for about $100 each month.

Charon said he’s fortunate to have a family that would step in to help if needed, but he doesn’t want to take advantage of them. So he continues to pay off his debt each month and prays that no unexpected expenses arise.  

“You lose some sleep at night, spending a few extra hours trying to make the numbers work,” he said. 

“It’s stressful. Tiring,” he added. “There’s a certain part of me that knows that this won’t be forever, but at the same time it feels like it’s going to be such a long time.”

Bailey Schulz

Trimming debt with a ‘snowball’

Angela Davis, a Detroit resident who is working off her credit card debt, is planning an austere Christmas.

Davis, 31, enrolled at the University of Michigan in the fall of 2018, pursuing a master’s degree in public health at the Ann Arbor campus. She financed her education with student loans and her job, working 12-hour shifts as a sanitation supervisor at a produce plant near her Detroit home. She thought she could both work and study full time.

“I would literally drive to work, go home, lie down for an hour, take a shower, then go to Ann Arbor,” she said. 

The routine lasted about two months.

Exhausted, Davis quit her job. Because student loans could not support her expenses, she began taking on credit card debt: A hundred dollars here, a hundred there, mostly groceries and gas and the occasional meal out with her fiancé.

Despite working hard at making payments, her card balances crept up. During the holidays, she fell further behind. By 2020, the year she earned her master’s, Davis had debt scattered across several cards with interest rates ranging as high as 24%.

Because she followed the budget-balancing gurus Dave Ramsey and Suze Orman, she knew she was in trouble, and had some strategies for digging out: She contacted the card companies to negotiate lower interest rates. She closed some of the accounts.

She kept two or three open, including her Old Navy card and a traditional credit card “for if I’m renting a car, or something like that.”

In early 2022, on the advice of a friend, she took her remaining debt – $19,000, on five closed accounts – to Money Management International, the nonprofit credit counselor.

Today, Davis has $8,000 in debt on three cards. She paid off two using a popular debt-reduction strategy called the “snowball”: You make aggressive payments on the debt with the smallest balance, aiming to retire it quickly, scoring both a financial and psychological win.

While never a big spender, Davis said she has found ways to cut back. She dines at home more often, but when she and her fiancé eat out, “We’re just not going to the $200 restaurants, getting our steaks and shrimp cocktails,” she said. Tricks, like only drinking water, save her from a $40 bar tab.

She also saves more money by working from home as a registered dietitian nutritionist. 

To keep Christmas costs manageable, she plans to avoid buying gifts.

“I’ll probably get cards,” she said. “I think my loved ones are pretty understanding. Look: I’m trying to get everybody on the bandwagon of paying off debts.”

Daniel de Visé

Zero interest in holiday debt

Living within her means is how single mom Kim Mahoney, 40, has spent her life in Chicago. Yet, she has about $6,000 in credit card debt. 

“It wasn’t from extravagant vacations or living outside my means,” she Mahoney, a dietitian. “Sometimes emergencies happen, and you aren’t left with a choice.” 

Still, she’s not letting that ruin her holiday. With careful budgeting, she’ll have money to spend.

“I … tend not to make extravagant purchases around the holiday season. I’m always looking for deals on presents or experiences for my child, and I budget toward the end of the year for these things.” 

Unexpected expenses in 2022 and 2023 ate up all of Mahoney’s savings and more, putting her deep in the red. It could have easily turned into a spiraling debt situation, except that she quickly developed a plan. 

“Thankfully, I have very good credit and was able to get a credit card that had a 0% interest rate for 12 months, which allows me to pay it off over time without incurring interest charges,” she said.  

With that 0% interest card, she’s been spared the pain of the Federal Reserve’s aggressive rate hikes over the past year and a half. Since March 2022, the central bank has raised its short-term benchmark fed funds rate by 5 percentage points to fight elevated inflation. Those hikes have driven up some credit card interest rates to around 30%. 

“This has taken a lot of stress off of having to adhere to a stricter budget to avoid incurring interest charges,” Mahoney said.  

By avoiding interest payments, she has money to spend this holiday and can continue funneling money to her retirement and her 7-year-old son’s Bright Start 529 education and savings account each month.   

And she remains determined not to squander the grace period she has with her 0% rate card. “I have budgeted a set amount every month to contribute to pay this off over the 12 months,” she said.

She is on track to accomplish that. 

Once Mahoney pays off her card, she said she’s going to turn her focus to rebuilding savings. And maybe, she will finally get a financial adviser. “That’s next on my to-do list,” she said. 

Medora Lee

‘Mommy is Santa Claus’

Cynthia Davis has a strategy for managing holiday wish lists: She pays cash or takes advantage of payment plan options when shopping for her high school son, who often wants expensive computer equipment. 

It helps her spread the cost out without going further into debt, said Davis, 52, of Perris, California. 

Davis has worked as a social worker for 26 years. Delivering for DoorDash and operating a side bakery also have helped her generate enough income to pay the bills, especially during the holidays. 

The biggest debt she carries is her student loan, estimated at $300,000, from college and graduate school. She recently had to start her $450 monthly loan payments. Davis is still hoping for a program that forgives the loans, especially since she is a social worker, and has applied for forgiveness. She also had to spend a lot on lawyers during a custody issue. 

Her credit card debt is smaller ‒ about $1,000 on two cards. But Davis still carries a balance and pays high interest rates because she has to prioritize bill-paying in her budget.

She tries to pay more than the minimum each month on the cards, which have interest rates of 27% and 29%, but “you know, it’s just never enough,” she said. 

Davis said she often got into credit card debt because she didn’t have the best money skills growing up. 

“You’re like ‘Oh, I got a credit card and I could use it’ without thinking ‘I’ve got to pay it back,’” Davis said.  “I’ve just now gotten to the point where I’m better at my credit.” 

The single mom recently moved into a house that her parents bought, but she helps with the bills. She also has a new car and insurance payments since her son recently began driving and outgrew their smaller vehicle.  

Her son’s Christmas requests have gotten more expensive as he has gotten older ‒ plus his birthday falls in early December. He enjoys building computers, and one year, the price tag was $1,200. After adding in a new desk, the total cost came to about $2,000.  

Now she either waits to buy the present until she has the cash, or she uses payment plans to break the cost into four installments. 

“Then I only have to put a little chunk of money down on it and it’s almost like layaway,” she said. 

This year, Davis’s parents will give her son some money to spend on computers for Christmas. 

Now that he’s older, her son also understands that “Mommy is Santa Claus,” she said. 

“If we can’t get it now, we work on it and we get it later,” she said. 

She’s holding off on working for DoorDash because she doesn’t feel as comfortable in the new neighborhood she moved to. 

Her bakery business, however, remains a valuable side hustle, even though the ingredients add up and cut into her profits.

“It helped me put a down payment on a car,” she said.

Betty Lin-Fisher

When the dream darkened, credit counseling saved them

This Christmas, Walker and Kayla Dunn will toast the end of a four-year nightmare of credit card debt.

The story began in 2018 when the Dunns made a time-honored real estate play. They bought a fixer-upper in Midland, Texas, for $280,000. Then, they set about remodeling it into their dream home. 

They planned to cover the renovation costs with $30,000 in personal loans. When the work was done, they would refinance the mortgage at a larger sum and use some of the proceeds to repay the smaller loans, along with any other debt they had taken on.

“We started with a blank canvas,” said Walker Dunn, 42. They lived in the home as they overhauled its interior, preparing dinner in the dining room while they rebuilt the kitchen, and washing dishes in the half-bath. 

When their personal loans ran out, they leaned on credit cards with high limits. 

“Me and my wife, we both make really good money,” Dunn said. “On paper, we looked very stable.” 

And then, the dream darkened. 

On Thanksgiving week in 2019, Kayla lost her job. With one big salary gone, they leaned harder on their credit cards, finally maxing them out. They struggled to keep up with the mortgage and the personal loans.

“It kind of hit us all at once,” Walker said. “Going over the budget with my wife, I was like, ‘There’s no way we’re ever going to catch up.’”

They contemplated bankruptcy. Instead, in late 2019, they sought credit counseling from Money Management International. They entered the program with $55,000 in debt across 14 accounts, with interest rates ranging as high as 28%. 

Credit counselors helped them get on top of their debt, negotiating the interest rates down to an average of 3%. Even then, the monthly payments added up to about $2,300, akin to a second mortgage.

In 2020, at the height of the pandemic, the Dunns requested mortgage forbearance, a temporary pause on payments for homeowners in duress. 

Under the terms of the forbearance, however, they could no longer refinance their mortgage to pay down their credit cards.

They put the house up for sale. It sold for $365,000 in the autumn of 2020, delivering a modest profit to the struggling family.

Kayla got a new job as a financial analyst in San Antonio. Now, the Dunns were a two-income couple once more. (Walker works in business relations for a maintenance company.) They moved to San Antonio with their children, a girl and boy, now aged 10 and 8, “and basically started all over,” Walker said.

The Dunns cut back on family vacations and put off home improvement projects to keep up with the aggressive monthly payments.  

Today, they are working through the last of their debt, spending a scant $300 a month. They expect to be debt-free by year’s end.

They have learned some lessons. Walker winces at the money he charged on top-flight appliances for the abandoned dream home: Never again.

“If you want to do home improvements, pay in cash,” he said. “That’s my mantra from now on.”

In the past few years, the Dunns have felt strapped at Christmas. This year will be different. The couple may even splurge on a few big-ticket items for the kids.

Even so, Dunn said, the family plans to shop smart: “watching items that are on sale, looking for deals before we buy.”

Daniel de Visé