How to Avoid Credit Card Debt During the Holidays
There’s a lot that makes the holidays a wonderful time of year. The festivities, spending time with loved ones and friends, and of course, the gift giving and receiving.
However, it’s all too easy to overspend during the holidays, which can lead to debt that lingers well into the new year. A common culprit: the misuse of credit cards.
With careful planning and savvy financial habits, navigate this holiday season without accumulating too much debt on your credit card. We’ve put together seven tips about how to use your credit card wisely during the holidays.
1. Set a Realistic Budget
The first step to using your credit card wisely during the holidays is to establish a budget. And a realistic one at that. Take a look at your overall financial situation and determine how much you can comfortably spend on gifts, decorations, travel, and any other holiday expenses. It might be hard when you are in the giving mood but be honest with yourself about what you can afford – and resist the temptation to overspend.
2. Meticulously Track Your Spending
It's easy to lose track of your spending during the holiday rush. However, keeping tabs on your purchases is crucial to staying on budget. Pro tip: Use a budgeting app or a tried-and-true spreadsheet to track your expenses in real-time. Then compare those with your budget to avoid overspending. Knowing where your money is going should help you make informed decisions and most of all, prevent impulse purchases.
3. Plan for Big Purchases
If you have a big-ticket item on your holiday shopping list, plan for the expense. Consider saving up for it in advance or looking for sales and discounts to get the best deal. If timing isn’t that crucial (presents are fun any time, right?), you might wait for post-holiday sales to score even more savings and have less to pay off. Bottom line, avoid putting big-ticket items on your credit card without a plan for paying it off promptly.
4. Don't Use Cash Advances
When using your credit card during the holidays, it might be tempting to take out a cash advance to cover expenses. Be warned, though, cash advances typically come with high fees and interest rates. This makes them an expensive way to borrow money. Instead, use your credit card(s) for purchases that you can pay off in full each month to avoid accumulating debt.
5. Resist Splurging Too Much
With so many holiday sales and promotions, it's easy to get caught up in the excitement of shopping – and overspend on gifts and decorations. Practice self-discipline and resist the urge to spend on items that are beyond your budget. Remember that adage? It’s the thought that counts. That’s where the real joy of gift-giving comes from!
6. Pay Your Card Balance in Full
One of the most critical aspects of using a credit card wisely during the holidays is to pay off your balance in full each month. Carrying a balance on your card can lead to high-interest charges that quickly add up and result in long-term debt. Make it a priority to pay more than the minimum amount due to reduce your balance and avoid unnecessary interest.
7. Keep an Eye on Your Card Activity
Last but definitely not least, be diligent about monitoring your credit card for any unauthorized charges or errors. Log into your digital banking platform and look over your card(s) transaction history. Report any suspicious activity to your credit union or financial institution immediately to prevent fraud and protect your finances. Keeping a close eye also can help you identify areas where you should cut back.
Final Thoughts
Using your credit card wisely during the holiday season can help enjoy all the festivities – without the burden of debt hanging over your head. Spending within your means is essential to your financial well-being, especially during the holidays. Remember to focus on needs versus wants and make smart choices that align with your long-term goal of staying debt-free.
With careful planning and a little discipline this holiday season, you can emerge from the joy (and chaos) with no or little debt. Wouldn’t it be great to ring in 2025 on solid financial footing?