Tips to Avoid Going Into Debt During the Holidays

You want to give gifts to friends and family without sinking into debt. With a little planning, you can enjoy the holidays without paying for them—plus interest—for months or years afterward.

Save in Advance

Saving ahead of time offers several advantages over relying on credit. Your money earns interest instead of costing you interest, and saving helps prevent overspending because you are limited to the amount you’ve set aside. Some financial institutions offer special savings accounts for holiday spending.

Layaway

Layaway allows you to select items and have the store hold them while you make regular payments. This ensures the item will be available later and keeps gifts hidden from family members. However, many stores now charge layaway fees, so be sure the fees don’t end up costing as much as credit card interest.

Loans

Credit cards and personal loans often see increased use during the holidays. Using credit responsibly can help build your credit history, but it’s important to borrow wisely.

Credit Cards

• Avoid opening cards with excessively high credit limits.
• Set a holiday budget and stick to it.
• Pay attention to interest rates and compare them with personal loan rates.

Personal Loans

• Borrow only what you need.
• Plan to repay the loan within a year.
• Set up automatic payments to ensure on-time repayment.

Give Creatively

Holiday shopping is fun, but meaningful gifts don’t always require money. Consider giving your time, skills, or talents—these thoughtful gifts are often more memorable than store-bought items.