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Stay on Top of Holiday Credit Card Debt

Credit card debt

The winter holiday season could easily be renamed the winter spending season. During the 2014 holidays, the average person expects to spend more than $800, according to a survey conducted by the National Retail Federation. The anticipated spending amount is 5 percent higher than last year’s average. Whether you plan on spending that much during the holidays or not, there are ways to keep your holiday credit card debt to a minimum. Even though the season is in full swing, it’s not too late to make a plan to emerge debt free in January.

Set a Budget and Save

This holiday season, make like Santa Claus and make a list, then check it twice. Figure out who you’ll buy presents for and how much you can afford to spend on each person. Along with your list of gift recipients, create a budget for the little details that go along with the holidays, such as the cost of decorations, going out, or host gifts for people throwing holiday parties.

Compare the amount you expect to spend during the season with the amount you have set aside for the holidays. If you don’t have any money set aside, look at your anticipated spending in contrast with the amount you’ll earn over the next few weeks. You might have to cross a few names off your list or tone it down on the decor so that you don’t end up in debt.

Stick with Cash

One simple way to avoid holiday credit card debt is to just say no to using your credit cards when out shopping. Using cash not only means you don’t have to worry about debt, it also changes the way you approach shopping and spending, according to the Chicago Tribune‘s report on a 2011 study. People who pay with cash are more likely to focus on the cost of what they are buying rather than its benefits. The study found that using cash as a payment actually made it more painful to buy something. While you might not want to associate the holidays with pain, using cash instead of credit is a reliable way to keep your spending under control.

Ignore Tempting Deals

Holiday shopping might seem like it’s all about getting deals, but some of those deals might not be such a bargain after all—especially if you end up paying interest or fees on them later. If you’re offered a deal on a store credit card, for example, weigh its value carefully. Will you be able to pay off the balance before interest is added? Keep in mind that opening a bunch of store credit cards during the holiday season will have a negative impact on your credit score, too.

Make a Pact

If you are worried about being able to afford the holiday season this year, talk to your friends and family about it. It could be that everyone is secretly worrying about affording gifts for others. You can make a pact with your loved ones to give handmade gifts or to only give gifts to the children in your lives, not to the adults.

The holiday season might be about being generous and giving. But if that giving is leading you deeper into debt, it might be time to reevaluate it. Remember, during the holidays, it’s the thought that counts—not how much you spend on everyone.

Image source: Flickr

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