10 Holiday Shopping Debt Traps You Need to Avoid
ByCharla Myers
UpdatedAug 19, 2025
- Don't start holiday shopping without a plan.
- Start early, and take advantage of big sales and free shipping.
- Avoid using credit cards, or use them and pay the entire balance right away.
Table of Contents
The holiday season should leave you with joyful memories—not a need for debt relief.
You don't have to end the holiday season in debt. Now is the perfect time to start planning for your next holiday season. Hopefully, one without holiday debt. Just follow our ten favorite holiday debt golden rules.
1. Create a Holiday Budget
If you decide how much to spend on the holidays, you're less likely to overspend. To do that, develop a holiday spending plan that includes everything you hope to buy, including presents, decorations, and food for holiday meals.
Next, take a look at savings and the money you have coming in that you could use to pay the holiday bills. Once you know how much money is available to spend and what you must buy, make a holiday budget setting limits for each type of purchase. Creating a budget goes a long way to helping you avoid overspending, since you’ll know how much you can afford to spend on each item and can use your resources wisely.
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 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 “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.
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 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 Store Charge 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 popup 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.
Get Rid of Debt and
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. 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 July 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 July 2025, people seeking debt relief had an average of 75% 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.
Personal loan balances – average debt by selected states
Personal loans are one type of installment loans. Generally you borrow at a fixed rate with a fixed monthly payment.
In July 2025, 44% of the debt relief seekers had a personal loan. The average personal loan was $10,718, and the average monthly payment was $362.
Here's a quick look at the top five states by average personal loan balance.
| State | % with personal loan | Avg personal loan balance | Average personal loan original amount | Avg personal loan monthly payment |
|---|---|---|---|---|
| Massachusetts | 42% | $14,653 | $21,431 | $474 |
| Connecticut | 44% | $13,546 | $21,163 | $475 |
| New York | 37% | $13,499 | $20,464 | $447 |
| New Hampshire | 49% | $13,206 | $18,625 | $410 |
| Minnesota | 44% | $12,944 | $18,836 | $470 |
Personal loans are an important financial tool. You can use them for debt consolidation. You can also use them to make large purchases, do home improvements, or for other purposes.
Support for a Brighter Future
No matter your age, FICO score, or debt level, seeking debt relief can provide the support you need. Take control of your financial future by taking the first step today.
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Author Information
Written by
Charla Myers
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.
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.
Review your spending and income
Decide how much free money you have available to spend
Divide that number up among the purchases you need to make
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. If you received a windfall like a tax refund or end-of-year bonus, you can put this toward holiday expenses 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.
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