In Your Debt: 4 ways to limit your holiday debt

Nov 25, 2022, 5:00 AM | Updated: 7:18 am
FILE - Black Friday shoppers wearing face masks shop at the Citadel Outlets in Commerce, Calif., No...

FILE - Black Friday shoppers wearing face masks shop at the Citadel Outlets in Commerce, Calif., Nov. 26, 2021. The holiday season is full of sneaky costs, expensive travel and the pressure to spend. It's a time that leaves many Americans in debt long after the decorations come down. But with some planning and the patience to hunt for deals, you can still enjoy a meaningful season without spending hundreds of dollars in interest payments. (AP Photo/Ringo H.W. Chiu, File)

(AP Photo/Ringo H.W. Chiu, File)

There’s a magical feeling in the air this time of year, but that magic costs money. Every year, the pressure looms large to spend more to create perfect holidays.

This high-cost season can leave you with debt that sticks around. According to NerdWallet’s 2022 Holiday Shopping Report, 31% of 2021 U.S. holiday shoppers who used a credit card to pay for gifts still haven’t paid off their balances.

With some planning, you may be able to avoid holiday debt. But if you go over budget and carry some credit card balances, there are ways to limit the damage to your finances.


Begin with your budget and gift list, along with a grocery list if you’re hosting any parties. Shopping apps and web browser extensions can make it easier to track price trends, compare pricing at different merchants, find coupon codes and earn cash back.

Online shopping can make it easier to overspend because of its convenience as well as improved user experiences on merchant websites.

“All of these different companies are trying to create the fastest, most friction-free way to purchase things,” says Emily Rassam, senior financial planner at Archer Investment Management in Charlotte, North Carolina. Rassam curbs the spending urge by adding items to her cart as she spots them but only reviewing what’s in the cart and making a final buying decision once a month. A little extra time between finding items and sitting down to buy them can make you second-guess your choices and then remove a few items from the cart.


Don’t forget smaller details that add up, like decorations and gift wrap. Reuse what you can — anyone who keeps old gift bags in a closet, this is your time to shine. Rassam recommends looking for deep discounts on these items immediately after the holiday season ends.

Hosting parties and hungry houseguests is more expensive now, too. The cost of food at home increased 12.4% from October 2021 to October 2022, according to the Bureau of Labor Statistics.

Beth Moncel, the founder of Budget Bytes, an online resource for learning how to cook with a small budget, suggests sticking to a simple holiday menu you can make inexpensively. “Classic recipes are simple, don’t require fancy ingredients, and are still totally delicious. Especially if you add an extra dab of butter,” Moncel said in an email. “A little extra butter is a simple and budget-friendly way to make any recipe a little better!”


If you get into holiday debt, add paying it down to your list of New Year’s resolutions. There are a few actions you can take to stay motivated:

— REDUCE INTEREST PAYMENTS: Consolidate high-interest debt with a balance transfer credit card or a personal loan. But note that although these products can help you spend less in interest (depending on what terms you qualify for), they don’t address the reasons why you got into debt in the first place. They can just be helpful as you try to pay it down.

— TRIM COSTS AND ATTACK DEBTS: Start the new year by looking through recent credit card and bank statements to see where you might be able to cut back. Any savings you achieve this way can be applied toward credit card payments. If you received any cash gifts or holiday bonuses at work, use these funds to pay down debt.

— SEEK HELP: Financial professionals and nonprofit credit counseling agencies can help you see your full financial picture so you can take action. It can be hard to sort through money issues alone, but unbiased advice can make it easier to get started.


Heath Carelock, program director of the Financial Empowerment Center at Prince George’s Community College in Largo, Maryland, cites his mother-in-law’s year-round dedication to holiday planning as a way to avoid debt. “She starts saving for the holidays starting New Year’s Day. She tries to buy all of her Christmas gifts by August.”

Carelock suggests shoppers take advantage of holiday sales throughout the year. If you know a sale is approaching, he says, hold off on a purchase until then.

Spreading out your holiday spending gives you more time to comparison shop, find deals and avoid racking up a bunch of credit card charges quickly. “It’s having a slow burn as opposed to a conflagration,” Carelock says.


This column was provided to The Associated Press by the personal finance website NerdWallet. Sara Rathner is a writer at NerdWallet. Email: Twitter: @SaraKRathner.


NerdWallet: 2022 Holiday Shopping Report


This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from Sept. 15-19, 2022, among 2,075 U.S. adults ages 18 and older, among whom 1,751 plan to purchase gifts this holiday season (referred to throughout this report as “holiday shoppers”). The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.8 percentage points using a 95% confidence level.

Bureau of Labor Statistics: Consumer Price Index Summary

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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In Your Debt: 4 ways to limit your holiday debt