10 Holiday Shopping Debt Traps You Need to Avoid
ByCharla Myers
UpdatedMay 1, 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 November 2024. This data highlights the wide range of individuals turning to debt relief.
Credit card balances by age group for those seeking debt relief
How do credit card balances vary across different age groups? In November 2024, people seeking debt relief showed the following trends in their open credit card tradelines and average credit card balances:
Ages 18-25: Average balance of $9,117 with a monthly payment of $282
Ages 26-35: Average balance of $12,438 with a monthly payment of $390
Ages 36-50: Average balance of $15,436 with a monthly payment of $431
Ages 51-65: Average balance of $16,159 with a monthly payment of $529
Ages 65+: Average balance of $16,546 with a monthly payment of $499
These figures show that credit card debt can affect anyone, regardless of age. Managing credit card debt can be challenging, whether you're just starting out or nearing retirement.
Collection accounts balances – average debt by selected states.
Collection debt is one example of consumers struggling to pay their bills. According to 2023, data from the Urban Institute, 26% of people had a debt in collection.
In November 2024, 30% of debt relief seekers had a collection balance. The average amount of open collection account debt was $3,203.
Here is a quick look at the top five states by average collection debt balance.
| State | % with collection balance | Avg. collection balance |
|---|---|---|
| District of Columbia | 23 | $4,899 |
| Montana | 24 | $4,481 |
| Kansas | 32 | $4,468 |
| Nevada | 32 | $4,328 |
| Idaho | 27 | $4,305 |
The statistics are based on all debt relief seekers with a collection account balance over $0.
If you’re facing similar challenges, remember you’re not alone. Seeking help is a good first step to managing your debt.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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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?
If you went into debt for the holidays, make a plan to pay it down ASAP. Look closely at your budget, identify unnecessary spending or areas where you could make cuts, and redirect that money toward paying off your debt. You may also want to consider doing some overtime at work or picking up some side jobs until your debt is repaid.
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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