I tend to fold it over on itself, then tuck the little bundle under the strap where it tightly contacts the pack. (Or, if there's an opening I can stuff it into, like the strap crossing over the top access to the main pack, I simply stuff it into that.)

After I've had sufficient experience with a pack, I'll cut the straps to the longest length I'll need, plus one inch - that's usually the second year I use the pack, so I've had a chance to really know what my bulkiest load is.