5 of the Best Tips to Avoid a Huge Holiday Credit Card Bill


It’s the holiday season! Thanksgiving and Black Friday quickly give way to holiday shopping. Every year, Americans spend billions of dollars on presents at this time of year. Unfortunately, many Americans also wind up putting those purchases on their credit cards. If they can’t pay those off the next month, those charges will accrue interest charges – often at a painfully high 20-30% APR.

With the general economic uncertainty due to the COVID pandemic, you may be especially wary of carrying credit card debt due to holiday shopping this year. If so, you’re not alone. Many people are looking for ways to keep the season enjoyable without having a challenging financial impact. Here are five tips to avoid the holiday bill while continuing to make the season fun, festive, and merry!

Budget Your Gifts

One way that people sometimes overspend during this season is through “little extras” and “trying to make things equal.” You know the feeling. You get friend A $100 worth of stuff, friend B $150, and then you feel the need to go back and get friend A a little more. Or, you buy all your child’s presents and figure that extra $20 toy won’t hurt, or that other $50 video game. It’s just a little bit on top of what you’ve already spent, and your child will love it!

Making a budget avoids many of these complications. That way, everyone will be equal, and you can plan your gifts accordingly.

To make a gifting budget, figure out how much you want to allocate, total, to your holiday gifts. This amount should be one that you’re comfortable with and that won’t put you into any debt. Let’s say you have $500 saved. You could take $250 of that and put that for gifts. Then, you can divide that $250 between all your friends and family.

Once you make a budget, stick to it! Once you’ve bought that person’s budget worth of gifts, that’s it for them for this year!

Consider Practical Gifts or Gift Cards Instead

Many people also find themselves overspending because they feel the need to buy more expensive things as gifts. Psychologists tell us that this isn’t necessarily true.

What people value most are gifts that they can use over the long term, not something that will be a sensational reveal. Jewelry and other big-ticket items aim to have a “wow” factor, but research shows that recipients don’t necessarily value that as much as givers do. Often, it’s not worth spending extra money in search of this moment.

Gift recipients also tend to like gifts they’ve asked for, hinted at, or talked about in the past. Sometimes the best presents are more practical and less about having a considerable dollar value. In fact, for the most part, the cost doesn’t even factor into how much someone will enjoy a gift.

Therefore, if your budget is $50, consider what the recipient has discussed or asked for recently that might be within that price range. What might they need that’s in that range? If you can’t think of anything, consider a $50 gift card. Even if it’s just a Visa or MasterCard gift card, you’ll probably find that the recipient enjoys it more than you think! If you can think of a store that they usually shop at, consider a gift card from there.

Take Advantage of Credit Card Rewards

If you’ve been using a credit card that gives you rewards points (e.g., Membership Rewards with American Express), consider using those points for gifts. Usually, you can redeem those points for gift cards, so even if you use some for a gift card for a nice meal, that’s money that you don’t have to spend out of pocket.

This tip is handy for cards or scenarios where you may have earned a reward but don’t have an excellent place to use it. For example, maybe your credit card has points that you can redeem for electronic gadgets that you don’t need. But that could make the perfect gift for someone else! It’s a win-win. You get to use points that you wouldn’t otherwise use, they get a gift, and you don’t have to spend any cash!

Make a List

Consider making a list of gifts to buy to help avoid impulse purchases and stick with your budget. While this might take some of the fun out of shopping, it enables you to ensure that you’re keeping track of everything.

This tip also has a side benefit of allowing you to search for the best prices for everything online. Instead of buying as you see things, you can make your list and then search and wait for the best prices. Not only will you make everyone happy, but you could also potentially come in under budget!

Start Saving for Next Year

If it’s too late to avoid spending too much on your credit card this year, you can take steps now to avoid having this same issue next year. If you haven’t already, consider opening up a bank account and designating it as a gift fund. Put a small part of each paycheck in it. When next year’s holiday season rolls around, you’ll have some money saved to give everyone the gift they deserve! Next year, your holidays will be significantly less stressful.

Holiday Shopping Needn’t Be So Financially Burdensome

Unfortunately, holiday shopping puts undue financial stress on millions of Americans each year. The average American plans to spend $1,000 on holiday gifts between friends, family, and other miscellaneous items (greeting cards, decorations, etc.).

However, it doesn’t have to be this way. Through adequate budgeting, creative gifts, making a list, and using up credit card rewards, you can avoid going into additional debt this holiday season. If you have not already, you can also open a bank account to save for next Christmas. $20 a week for 52 weeks would give you that $1,000 to spend on gifts by the end of the year.

Have a happy and festive holiday season!