Credit Card Debt

10 Holiday Shopping Debt Traps You Need to Avoid

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Tis the season … to avoid overspending. As the festivities begin, it’s easy to be merry and want to bring joy as a giver of gifts. In fact, the average American consumer will spend around $942 during the holidays. That’s a lot of presents! But that can lead to a lot of holiday shopping debt. Here are 10 tips to keep your budget on track while celebrating the season.

1. Create a holiday budget

Develop a plan that includes all holiday expenditures—from presents to decorations and food for holiday meals. This can be a powerful way to avoid overspending, since you’ll know how much to spend on each person and what it will cost to host dinner for family and friends.

2. Shop with a plan

Write down gift ideas for each recipient so you have more direction when you go shopping. When you see the right gift at the right price, purchase it, check that recipient off the list, and don’t buy anything else for that person. 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 a Secret Santa game where each person buys one gift for the person they were assigned. That way, instead of buying seven different gifts, there’s more money to focus on a single perfect present.

If you’re still paying down 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, they tend to make impulse purchases that can be expensive and lead to holiday shopping debt. Shopping under pressure makes it harder to say “no” to items that cost more than originally budgeted. Plus, by shopping early, there’s more time to enjoy the season.

5. Watch “reward” offers

Many retailers offer tiered rewards in relation to the amount you spend, such as $5 off a $50 purchase, $15 from $100, or $35 off of $200. This is designed to make you feel like you’re saving more even though you’re also spending significantly more than you intended. Of course, if you were planning to spend over $200 at a particular retailer anyway, then this is a great deal. A smart rule is to only use rewards for purchases you were planning to make without the special offer.

6. Take advantage of the big sales

From Black Friday through Cyber Monday, you can get some amazing bargains if you’re prepared. Ensure an item is on your list, then check which stores will be offering it at the best price. Sign up for newsletter emails from your favorite stores to get advance notice about special sales and insider-only deals.

7. Leave your credit cards at home

Ideally, shop with cash or a debit card to avoid maxing out your credit cards. Shopping with credit cards makes holiday shopping debt a huge risk, as studies show that people spend more when they use credit. If you’re not comfortable carrying cash or if you don’t have a debit card, then use only one credit card and keep a running tally of your purchases.

8. Avoid store charge cards

Store-brand charge cards may offer a significant day-of-purchase discount or a period of no-interest on day-of-purchase items, but 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 at the register.

Plus, 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

If you’re shopping online, enter the item into Google and click the “Shopping” tab to see the lowest price (including shipping costs). Other tools that help you find the lowest price and avoid holiday shopping debt include apps like ShopSavvy which lets you scan a product’s barcode or QR code to find if other stores or sites have better deals on it.

10. Get free shipping

Many retailers offer free shipping for holiday purchases, although sometimes there is a requirement for a minimum purchase amount. Overall, during the season, shipping costs should be the least costly expenditure on your list.

Accumulating unmanageable amounts of debt doesn’t just happen because you spend too much over the holidays. Typically, it’s a hardship or unexpected large expense that pushes things over the edge. But controlling your spending can protect you from sliding down the slippery slope of heavy credit card debt.

Get out of debt and really enjoy the holidays

Whether you’re already struggling with debt or are just worried about falling due to holiday spending, it might be time to take action. Freedom Debt Relief is here to help you understand your options for dealing with your debt, including our debt relief program. Our Certified Debt Consultants can help you find a solution that will put you on the path to a better financial future. Find out if you qualify right now.

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Charla Myers writes content that (hopefully) simplifies complex information to help people make decisions or complete tasks more effectively and efficiently. In particular, she loves empowering readers to find the right financial solutions for themselves. Living in California, she enjoys the beach, reading, hiking, and hosting dinner parties.