How to Avoid Credit Card Debt at Christmas: Staying on Budget

Nicolas Cesare  | 

Giving and receiving gifts is something that many of us look forward to all year. With credit cards, it’s easy to streamline your Christmas shopping and relieve a lot of stress during the holiday season. However, credit card debt during the holidays can turn one of the most wonderful times of the year into one of the most dreadful. Use your credit card wisely during the holidays to make sure that your shopping goes off without a hitch.

Why You Should Use Your Credit Card for Christmas Gifts

When you hear stories of debt and stacks of bills, it can be tempting to avoid credit cards altogether. Ultimately, though, avoiding credit cards is a mistake. Using your credit card for purchases is a great way to build credit from scratch or to repair your credit score after financial hardship.

Using your credit card to do your Christmas shopping will help you utilize your account. As long as you pay off your balance at the end of your billing cycle, this utilization will end up reflecting favorably on your credit history. If you use your credit card the right way, you will end up spending the same amount (or even less) than you would’ve if you had paid for Christmas gifts with cash.

Managing Your Credit Card Balance When Buying Gifts

Using your credit card to for Christmas shopping is a good thing as long as you don’t go over your credit limit and you are able to pay your credit card bill at the end of the holiday season. The key to staying within these limits is to budget responsibly for your gift-buying and then to stick to a budget once you’ve set it. Ideally, you will have a gift budget set so that you are still able to pay your balance off in full without risking any interest or fees. In a pinch, you may come up with a budget that minimizes the balance you carry into January. Here’s how you can create a Christmas shopping budget before you even step into a store or begin browsing online.

Identify how much you can afford to spend on gifts. This will be your maximum spending limit. No matter how enticing a Black Friday deal looks or how badly your kids ask for a new video game, you absolutely must not go over this limit. Your maximum spending should be limited by the disposable income that you expect to have at the end of the holiday season, when it comes time to pay the credit card bill for your Christmas shopping.

  • Compare your shopping list to your spending limit. Look up standard retail prices for the items you plan on buying. There may be better deals available for these items later on down the road, but the first draft of your budget should not count on there being such deals. If the cost of the items goes over your maximum spending limit, then it’s time to make hard choices about what to cut. Remember that the spirit of a gift matters more than the price point — meaningful gifts don’t have to be expensive, so it may be reasonable to cut one or two expensive items in order to make room for more heartfelt gifts.
  • Improvise and adapt as the holiday season goes on. You shouldn’t count on particular deals or sales when you first start shopping for the holidays, but that doesn’t mean you can’t celebrate good deals when you encounter them. Use price protection services if your credit card offers them. This will help you come in under budget at the end of the holiday season.

How to Deal With Holiday Credit Card Debt

In spite of your best intentions, you may find yourself with a credit card bill that you cannot pay at the end of the holiday season. If this is the situation that you find yourself in, here’s what you can do to deal with that holiday credit card debt:

  • Make your minimum required payment on time. Paying the minimum amount required by your credit card company won’t make your balance go away, but it will save you from late payment fees and possible charge-offs for the time being.
  • Prioritize your credit card debt. If you are carrying a balance on your credit card, then make it a priority to pay off that balance as soon as possible. The longer it stays on your account, the more interest it will collect, forcing you to pay even more money later on down the road.
  • Negotiate a repayment plan. If your credit card debt gets out of control and you are unable to meet your minimum payments, then it’s time to start negotiating with the credit card company for a repayment plan.

The holidays are a great time to give and receive gifts. Make your Christmas shopping as stress-free as possible by using your credit card. Make sure to create a budget and stick to it for your gift shopping so that you don’t end up with credit card debt after the holidays.

Doing more credit card shopping for the holidays? Visit our credit card learning center for all the credit card-related information you might need.


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Nick Cesare is a writer from Boise, ID. In his free time he enjoys rock climbing and making avocado toast.

This post was updated December 11, 2017. It was originally published October 25, 2017.