10 Holiday Shopping Debt Traps You Need to Avoid
- You could be left with debt regret if you start holiday shopping without a plan.
- Start shopping early for the holidays, and take advantage of big sales and free shipping to save.
- Avoid using credit cards, or use them and pay off the entire balance right away.
Table of Contents
- 1. Create a Holiday Budget
- 2. Shop With a Plan
- 3. Buy Treasures, Not Trophies
- 4. Shop Early in the Season
- 5. Watch Out for “Reward” Offers
- 6. Take Advantage of the Big Sales the Smart Way
- 7. Leave Your Credit Cards at Home
- 8. Avoid Credit Cards
- 9. Use Savings Apps
- 10. Get Free Shipping
- How Can I Avoid Holiday Debt?
- Get Rid of Debt and Really Enjoy the Holidays
Holiday shopping debt is very common. While it's tempting to borrow to create magical moments, the holiday season should leave you with joyful memories—not the need for a debt relief program.
Going into debt during the holidays can impact your financial health year-round. In fact, being left with a mountain of bills could make it more difficult to live within your means later on, as you have monthly payments to make that eat up part of your income. You may even find yourself in need of debt settlement if you get too deeply into debt during the holidays or in their aftermath.
You don’t have to end the holiday season in debt. You just need to make some smart plans in advance and shop carefully to be festive and frugal. Just follow our 10 favorite holiday debt golden rules to have a great time without breaking the bank.
1. Create a Holiday Budget
According to the National Retail Federation, consumers in 2025 plan to spend $890.49 per person on average on holiday gifts and other seasonal items including decorations and food. This is the second-highest projected spending amount in the 23-year history of the NRF's survey.
The problem is that many people can't afford to spend this much—at least not without going into debt. If you don't have that much cash saved, you should develop a holiday spending plan that allows you to buy what you need for less.
Here's how you can create a holiday budget to help keep you on track so you can avoid being left with bills you regret and a need for credit card debt relief.
Allocate your budget
Your budget should start with an overall spending limit, such as specifying that you want to spend no more than $500 or no more than $800.
However, it's helpful to break this top-line budget down into different categories and be very specific about what you plan to spend on each. For example, you could choose to:
Spend 60% of your budget on gifts
Spend 25% for meals and entertaining
Spend 15% for travel and miscellaneous expenses
Your allocations may look different than this, but the important thing is to have an overall limit, an idea of what the money needs to buy, and a plan to cap your spending in each category. This way, you don't end up having spent all your money on gifts and having to go into debt to travel to your family party to actually give the gifts away.
Examine last year's spending
Most people's needs don't change too much from year to year, so looking at what happened last year is a good guide for this year.
You can see what you spent to get an idea of whether the budget you are making is reasonable. If you're budgeting $400, for example, and you spent $900 last year, you'll need to be ready to make big cuts or find a way to adjust your budget without borrowing.
It's also worth considering how your prior year's spending impacted your finances throughout the year. If you overspent and went into debt, did that cause you financial stress later on? Did it make it harder to cover the bills for a few months after? If so, that may give you more motivation to stick to your budget in 2025.
Track spending using apps
If you want to make sure you are staying on budget, you have to track your spending to see if you're remaining within the limits you set for yourself.
There are apps you can use to do that, like YNAB and EveryDollar, although these apps can come with fees. You can also just use a simple spreadsheet or notebook. You can write down each purchase as you make them, and can keep your receipts and enter the amounts into your sheet so you can monitor whether you are getting close to your spending limits.
Account for hidden extras
Unfortunately, sometimes it's the surprise expenses that end up busting your budget, so make sure you account for the costs you don't always think about that are going to creep up. Some examples include:
Wrapping paper
Postage stamps
Last-minute shipping costs
School holiday celebrations or field trips
If you set aside $50 or $100 for these unexpected expenses, you won't end up going over budget because of expenses you forgot.
2. Shop With a Plan
Write down gift ideas for each recipient so you have more direction when you go holiday shopping. When you find the right gift at the right price, purchase it, check that recipient off the list, and don’t buy anything else for them. If you spot another great gift, make a note to get it for their next birthday or holiday.
3. Buy Treasures, Not Trophies
It’s better to get gifts a recipient will treasure, rather than “stuff” to fill the stocking.
For larger groups and families, consider collaborating with others to pool resources and get a more expensive gift that will be cherished.
Or try organizing a Secret Santa exchange where each person buys one gift for the person they were assigned. That way, instead of buying seven different small gifts, you'll have money to focus on getting a single perfect present.
If you’re still paying down holiday credit card debt, reconsider giving gifts at all. The people in your life who truly care might not want you to sink deeper into debt just to buy them something.
4. Shop Early in the Season
When people wait too long to do their holiday shopping, they tend to make impulse purchases that can be expensive and lead to holiday shopping debt. Shopping under pressure makes it harder to pass up items that cost more than originally budgeted. Plus, if you shop early, there’s more time to enjoy the season.
5. Watch Out for “Reward” Offers
Many retailers offer tiered rewards based on the amount you spend, such as $5 off a $50 purchase, $15 off $100, or $35 off $200. These offers are designed to make you feel like you’re saving more if you buy more, even if you end up spending significantly more than you intended.
Of course, if you were planning to spend over $200 at a particular retailer anyway, getting rewarded for it is a great deal. However, just make an effort to earn and redeem these special bonus rewards only for spending you would have done anyway.
6. Take Advantage of the Big Sales the Smart Way
From Black Friday through Cyber Monday, you can get some amazing bargains if you’re prepared. You don't want to splurge on anything unnecessary, though.
To make the most of these holiday shopping opportunities without busting your budget, look at your list of gifts to review the items on it.
Check different stores to comparison-shop and figure out which offers the best bargains on your big-ticket items. You can also sign up for newsletter emails from your favorite stores to get advance notice about special sales and insider-only deals.
Make sure that a deal is really a deal
It's worth remembering that Black Friday and Cyber Monday deals aren't always all they are cracked up to be. These deals may not be significantly better than other sales, and in some cases, the items you buy are lower-quality items with fewer features produced specifically for these sales events.
There are also certain items that you can get better bargains on at other times of the year. For example, while there may be great sales on TVs and electronics on Black Friday, things like winter clothing tend to be priced better during end of season sales before summer starts.
You can shop for bargains throughout the year, and use apps like CamelCamelCamel for Amazon or Honey, which offers a price history feature, to confirm whether you're really getting a lower-than-average price.
Learning about each store's price-matching policy can also help you to score the best bargains without having to waste gas to travel to 20 different stores. If you can show competitor ads, stores like Best Buy and Target may be willing to offer you the same bargains.
7. Leave Your Credit Cards at Home
Studies show that people spend more when they use credit, so shopping with credit cards increases the risk that your holiday spending could get out of control. Eliminate this risk and avoid overspending by bringing only the cash that you budgeted to spend. If you’re not comfortable carrying cash, use a debit card.
8. Avoid Credit Cards
Store-brand charge cards often offer a significant discount on the day you sign up for the card. Some also offer no-interest for a select time on items you purchase the day you open the card.
Unfortunately, these cards often come with high interest rates as well as other fees. If you don’t repay the full balance the next month, the interest charges could equal or outweigh what you save when you sign up for the card.
Applying for a new credit card usually involves a credit inquiry, which may lower your credit score. It’s always better to use cash, a debit card, or a credit card you already have if you can pay the full balance by the due date.
9. Use Savings Apps
Apps can help you save a lot of money on your holiday shopping.
For example, if you’re shopping online, enter the item into Google and click the “Shopping” tab to see the lowest price (including shipping costs). That way, you can always find the best deal.
ShopSavvy is another tool that can help you find the lowest price. ShopSavvy lets you scan a product’s barcode or QR code to find out if other stores or sites have better deals on it.
Rakuten is a browser extension that pays cash back on many purchases. A pop-up will alert you to cash back offers that match what you’re searching for online.
Using these apps won't just help you during the holidays either—taking advantage of them all year long is a good financial habit to master.
10. Get Free Shipping
Overall, during the holiday season, shipping costs should be the least costly expenditure on your list.
Many retailers offer free shipping for holiday purchases, although sometimes there's a requirement for a minimum purchase amount. You can also look for coupon codes to make shipping free, or shop at stores that offer no-cost local pickup.
How Can I Avoid Holiday Debt?
As you can see, there are many different techniques that you can try to avoid holiday debt. The key is to make plans and make a commitment to yourself that you won't overspend.
By creating a budget, shopping smartly, and being choosy about the gifts you buy, you can still have an amazing time and make great memories for your loved ones. Those memories just won't include being stuck with credit card bills to pay after the holidays are over.
Remember, you aren't trying to create a holiday fit for the big screen. The important thing is to spend meaningful time celebrating with the people that you love without derailing your finances for the rest of the year. It takes a little effort, but if you put your mind to it, it's definitely achievable and it is well worth doing.
Get Rid of Debt and Really Enjoy the Holidays
Whether you’re already struggling with debt or are just worried about borrowing too much to fund holiday spending, it might be time to take action.
Freedom Debt Relief is here to help you understand your options for managing what you owe, including our debt relief program. Our Certified Debt Consultants can help you find a solution that'll put you on the path to a better financial future. Learn how Freedom Debt Relief works, and find out if you qualify right now.
A look into the world of debt relief seekers
We looked at a sample of data from Freedom Debt Relief of people seeking the best debt relief company for them during September 2025. This data highlights the wide range of individuals turning to debt relief.
Credit utilization and debt relief
How are people using their credit before seeking help? Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress. We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 31% and 50%, high is between 51% and 75%, very high is between 76% to 100%, and over-utilized over 100%). In September 2025, people seeking debt relief had an average of 73% credit utilization.
Here are some interesting numbers:
| Credit utilization bucket | Percent of debt relief seekers |
|---|---|
| Over utilized | 30% |
| Very high | 32% |
| High | 19% |
| Medium | 10% |
| Low | 9% |
The statistics refer to people who had a credit card balance greater than $0.
You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.
Home-secured debt – average debt by selected states
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) (using 2022 data) the average home-secured debt for those with a balance was $212,498. The percentage of families with mortgage debt was 42%.
In September 2025, 25% of the debt relief seekers had a mortgage. The average mortgage debt was $236504, and the average monthly payment was $1882.
Here is a quick look at the top five states by average mortgage balance.
| State | % with a mortgage balance | Average mortgage balance | Average monthly payment | |
|---|---|---|---|---|
| California | 20 | $391,113 | $2,710 | |
| District of Columbia | 17 | $339,911 | $2,330 | |
| Utah | 31 | $316,936 | $2,094 | |
| Nevada | 25 | $306,258 | $2,082 | |
| Massachusetts | 28 | $297,524 | $2,290 |
The statistics are based on all debt relief seekers with a mortgage loan balance over $0.
Housing is an important part of a household's expenses. Remember to consider all your debts when looking for a way to get debt relief.
Manage Your Finances Better
Understanding your debt situation is crucial. It could be high credit use, many tradelines, or a low FICO score. The right debt relief can help you manage your money. Begin your journey to financial stability by taking the first step.
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Author Information
Written by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
Reviewed by
Christy Bieber
Christy Bieber has been writing about personal finance and law for 16 years. She has a JD from UCLA School of Law with a focus on business law, and a BA in English, Media & Communications from the University of Rochester, as well as a Certificate of Business Administration.
How do I avoid overspending on the holidays?
The best way to avoid overspending on a holiday is to create a budget and stick to it. To make your budget:
Review your spending and income: Look at how much money you have coming in from all sources as well as regular monthly expenses and one-time costs you have to pay.
Decide how much free money you have available to spend: Based on your available funds and the time left until the holidays, see how much you can spend on holiday gifts without going into debt. For example, if you can save $100 per month and there are three months left until Christmas, your budget for Christmas could be $300.
Divide that number up among the purchases you need to make: Once you have your top line budget, decide how to divide that amount among different expenses. For example, plan to put some of the money toward gifts, some toward travel, some toward entertaining, and some toward miscellaneous expenses.
Track your spending to stick to your budget: Keep careful track of where your money is going so you'll know how much you have already spent in each category and can avoid spending too much.
If you worry about splurging, take only cash with you when you go holiday shopping.
How do I get out of holiday debt?
You can use several strategies to get out of holiday debt, including the debt snowball or avalanche methods, adjusting your budget, or starting a side hustle.
The debt snowball and debt avalanche methods are different ways to allocate extra debt payments. With the debt snowball method, you'll pay extra toward your debt with the lowest balance first to pay it off and score quick wins. You keep making minimum payments on your other balances. Then, roll the money you were paying toward that debt onto the debt with the next lowest balance. With the avalanche method, pay extra toward your debt with the highest rate first, while you keep making minimum payments on your other debts.
If you received a windfall like a tax refund or end-of-year bonus, you can also put this toward holiday debt as well.
What should you do when you can't afford holiday spending?
If you can't afford to spend much for the holidays, find ways to make the time festive without going over budget.
Give homemade gifts, or gifts of your time, like a night spent babysitting or dog sitting for a friend. You can even create your own decorations and host potluck meals to keep entertaining costs down.
Try to avoid going into debt, because otherwise your holiday spending could affect your financial stability throughout the year.
What if I'm still paying off last year's holiday debt?
If you are still paying off last year's debt when the current holiday season arrives, then it's really important to have a plan to tackle that debt and avoid borrowing more. Take a look at your savings and income, decide how much you can afford to spend this year without borrowing, and make a budget to divide up those funds.
Consider cost-cutting measures like organizing a Secret Santa gift exchange instead of buying gifts for everyone in your family, and look into options for homemade gifts or gifts of your time such as babysitting or pet sitting. Focus on paying for this holiday without borrowing, then when you have enough saved to do that, make a plan to pay as much as you can toward the debt until you are debt-free.
If you are really struggling, you can also check out the Freedom Debt Relief FAQ to find out if Freedom Debt Relief could work for you.
What’s the best way to pay for holiday shopping without going into debt?
The best way to pay for holiday shopping without going into debt is to set a budget and save for the holidays throughout the year. For example, if you want to spend $600 on the holiday season, you could save $50 per month to be ready when the time comes.
Allocate your spending among different categories like gifts, entertaining, and travel, so you can make sure you don't find yourself falling short on any of the essentials.
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