For many people, the winter holiday season is an opportunity to indulge, and not just on special treats. A lot of extra shopping occurs during this time, on everything from parties to gifts. It all adds up, and this year people plan to spend more than ever.
According to a 2024 KPMG Consumer Pulse survey, U.S. consumers planning to spend 4% more on holiday expenses this year compared to 2023, reaching an average of $948 per person.
That’s jolly if you can afford to drop that much, but that’s not always the case. A 2024 Morning Consult poll found that 20% of U.S. adults said they’ll have to go into debt to pay for holiday celebrations and obligations.
While it’s tempting to borrow for what you can’t afford, it’s rarely a good idea. The pleasure will be temporary since you’ll soon be facing the bills. Here are 10 great ways to avoid holiday debt.
1. Calculate Real Holiday Costs
“With inflation rates and rising prices, it may be harder to buy last-minute impulse gifts or squeeze in a few extra presents,” explained Courtney Burrell, a senior financial professional at Empower, in an email interview. “Create a list of all your holiday expenses first.”
Be careful to be comprehensive, including such common expenses as decorations, travel, events, entertainment, cards, wrapping paper, food, and shipping charges. Tally it all up. With this information, you can avoid being caught unaware and out of money, and scrambling to pay for it all with a credit card.
2. Set Your Personal Limit
Based on your real holiday costs, determine what you truly want to spend. “How you allocate your holiday budget will depend on what’s most important to you,” Burrell said.
“This year you may prioritize travel to visit family that you typically only see during the holidays over decorations, or cut back on social commitments to give yourself a larger budget for holiday gifts,” she said.
When you reach a comfortable spending figure and you know you have that amount of cash in your bank accounts, consider it your personal spending limit. Commit to keeping your spending at or below your limit.
3. Delete Your Charges in Real Time
Credit cards are not just secure and convenient. If your accounts have a rewards program, you will be accumulating cash, points, or miles as you charge.
However, it can also be tempting to overspend when the limit on your card is high. Keep in mind that it’s money you have to repay, and it won’t feel so good when the bill comes in.
This year, consider adopting a new approach. Put your banking app on your phone, and every time make a charge, transfer that exact amount from your checking account to the credit card account.
You’ll stay out of debt, won’t have to make a monthly payment and your rewards won’t be devalued by applied interest.
4. Use Money in Your Wallet
“An effective and often overlooked method is using a cash-only system for holiday purchases,” says Jeff Rose, certified financial planner and founder of the website GoodFinancialCents.
“It’s simple. Withdraw a set amount of cash based on your budget and use only this for all your holiday spending. This tactile approach makes you more aware of each dollar you spend, reducing the likelihood of overspending compared to swiping a card,” Rose says.
Just be sure to keep all of your receipts in case you need to make an exchange or return, and keep a close watch on your wallet. Unlike with debit and credit cards, if your cash is lost or stolen it’s likely gone forever.
5. Track Holiday Spending With Spreadsheets and an App
Even with the best intentions, spending can spiral out of control during the hectic holidays.
To prevent that, Amanda Webster, chief operating officer of Fund&Grow, a company that helps businesses secure funding, says to create a spreadsheet on Excel, Google Sheets or Open Office with everything you want to buy.
“You can break your spending down to show your total spending as well as how much you’re spending per person,” Webster says. “You should also note whether any of these new charges come with special promotional terms or need to be repaid before a certain date.”
Refer to the spreadsheet before shopping and update it after.
Consider using one card for your purchases, too, so you can see where and how much you spent on a single statement. “This also makes it a lot easier if you have to make any returns or exchanges after the holidays,” Webster says.
Before heading out, enable the mobile alert function on your credit card’s app. This way, you can monitor your transactions as you go along since the company will send purchase notifications to your device in real-time.
Another option is to use a money management app that will ping you when you’re nearing your allotted budget.
[Read: Best Budget Apps.]
6. Offset Inflation With Discounts
The KPMG Consumer Holiday Shopping survey also found that 39% of consumers prefer to do their seasonal shopping online. If you’re among them, take time beforehand to research all available discounts that you can quickly apply to your cart.
Since inflation has pushed the cost of many goods and services skyward, you may be spending much more on things you usually buy for the holidays. You don’t want the difference turning into consumer debt that you’ll have for months.
“Many of my clients use Honey, a free browser extension that automatically finds and applies coupon codes at checkout,” says Steve Sexton, CEO of Sexton Advisory Group.
“I use it, too. It’s really easy. You can get coupons and promo codes at thousands of stores, and even book travel. Lowering costs is key right now,” he adds.
7. Sell Items and Shop With the Profits
It is entirely possible that you can escape the holidays without spending a penny of your savings or using your credit cards for all the things you want.
Look around your home and yard now. Chances are you will find at least a few valuables that you don’t need but that you can sell. You may be surprised by how much you can earn.
For example, you may have upgraded your phone but the previous model is gathering dust in your drawer. Check to see how much you can get for it on sites like Swappa, where an Apple iPhone 14 Pro Max in good condition can put about $478 in your pocket.
You may also have unused sports and exercise equipment, furniture, clothes, jewelry, artwork, and other items that you can easily and quickly sell online.
8. Lower Your Gift Giving Budget
The pressure to buy just the right gift can lead to overspending. If cash is tight, Sexton recommends gift exchanges such as Secret Santa or white elephant, where you only buy for one person. Or gift your loved ones homemade baked goods, scrapbooks or handmade ornaments.
“One year, I put together recipes from my mom, made them into books, and gave them out as gifts,” Sexton says. “People loved them. Seeing everyone I love at a potluck is also very cool, and can be very inexpensive.”
9. Charge on a New Card and win a Bonus
This may be the perfect time to open a new cash-back credit card that offers a high sign-on bonus. After charging a certain sum within the designated time frame, the company will reward you with money. As long as you don’t carry over debt, you’ll have a net gain.
Just one example is the Blue Cash Everyday® Card from American Express. It offers a $200 statement credit after you charge $2,000 within the first six months.
Consider how a deal like this might work for you. Perhaps you decided on an $800 holiday shopping limit. Charge those purchases and pay the bill in full. As long as you spend another $1,200 over the next six months, the $200 bonus is yours.
10. Redeem Your Credit Card Rewards
You may not want to touch your credit cards at all this year, and instead pay for everything with cash or a debit card connected to your checking account. That’s fine and will guarantee that you won’t accumulate any debt.
However, if you have rewards cards and have used them liberally in the past, log into your accounts or check your app to see if you have any rewards that you can redeem.
You may be eligible for cash back or can use your rewards to purchase gift cards for you to spend during the holidays (or give as presents). If your cards offer rewards as points or miles, you can usually trade them in for cash or gift cards, too, though the best value is typically for travel.
Finally, Imagine a Debt-Free New Year
Clearly, there are many methods you can put into place to prevent getting into debt as you are preparing for and enjoying the holidays. But one of the most effective strategies is to plan ahead and think about how you will feel when opening your credit card statements.
“Carrying over credit card debt is a heavy burden,” Rose says. “Imagine starting the new year with complete freedom to start the life you want.” Lean into that feeling and let it guide you toward making financially healthy decisions, now and in the future.
Good news for bargain hunters: Gone are the days of having to stand in line at dawn and then elbow your way through a store to get your hands on coveted Black Friday deals, as many retailers have already launched their Black Friday sales in stores and online.
Target, Amazon, and JCPenny were among the large retailers that released their promotions a week ahead of Thanksgiving, while Walmart and others dropped their deals on Monday.
Some experts say this is a broader shift toward spreading out discounts and sales throughout November instead of just on Black Friday and its online counterpart, Cyber Monday.
Even so, Black Friday remains a popular day to shop for holiday gifts. Based on survey results, the National Retail Federation projected that 132 million people will go shopping that day, and almost two-thirds of them will do so in stores.
The preference for in-person shopping on Black Friday is a shift from last year when the National Retail Federation estimated that 76.2 million people shopped in person and 90.6 million made purchases online.
Consumers who prefer to ditch the hustle and bustle in stores by looking for promotions and discounts online should be aware of retailer tricks meant to pressure shoppers into making a purchase, online scams, and porch thieves who are hoping to steal packages from your front door. Here are some tips from experts to help you make your way through the season’s first big shopping weekend.
Pressure to make impulse purchases
It’s already overwhelming to make your gift list and check it twice to ensure that you’re not missing anyone, whether it be your aunt in Boca Raton or your mailman down the street. It’s even more overwhelming to find one of those gifts on sale at an online retailer, only to see a tag in bold lettering that says “High Demand,” “Low stock” or “In 10 people’s carts,” because your next thought tends to be, “This could sell out, I need to get it now.”
These are often just mind games retailers and advertisers play that are “designed to spur us to make hasty spending decisions,” said R.S. Cross, campaign director for Public Interest Research Group.
The organization found that on top of urgent messaging, some sellers on the online marketplace Etsy are using fake countdown timers on deals that don’t expire.
PIRG tracked 20 bestselling or Etsy-curated products with countdown timers on deals and discovered that 16 timers reset for another 24 hours when the timer hit zero. The other four items further dropped in price when the timer ran out.
Other common tactics include displaying how much an item will cost by making monthly installments that “both make low-cost products’ prices seem cheaper and make expensive impulse purchases more doable,” according to the organization.
To help resist this manipulation, Consumer Reports suggests that consumers create a budget and stick to it. It’s easier said than done, especially when Black Friday deals are presented as limited-time offers.
Consumer Reports also recommends starting shopping early. If you purchase an item now and see a price that has dropped later, you can contact customer service and they’ll usually refund the difference.
As you search for deals this week, Cross said, compare items across various online retailers “and don’t get distracted by offers you haven’t had the time to think through,” said Cross.
You can use online tools including Google Shopping, Price Grabber, and Shopzilla to compare the prices of products on various retailer outlets.
Avoid online scams
When you peruse the internet for sales from specific brands and retailers, make sure you’re clicking on and making purchases from their official websites.
Online security group McAfee identified a surge in counterfeit sites and phishing scams that use the names of popular luxury brands and tech products to lure consumers into purchasing products for what the consumer believes are unbelievably low prices. Instead, they’re giving away personal information (including credit card, address, and account information) to cyber crooks.
McAfee researchers found these sorts of scams targeting footwear and handbag brands, including Adidas and Louis Vuitton. Scammers also tricked consumers by using the Apple brand on fake websites linked to stores selling counterfeit Apple items alongside unrelated brands.
Experts say the best way to counter these scams is to be skeptical of a product when the discount seems too good to be true. Carefully check the URL of a website to ensure that it’s legitimate — even minor variations in spelling or style are a telltale sign of a scam.
Porch pirates
Online purchases are easy because once you click the “complete order” button, all you have to do is wait for the package to arrive at your front door. But porch pirates may also be prowling for packages to arrive so they can swipe them.
These thieves steal packages primarily from residences whose front doors are easily visible and within 25 feet of the street, according to the Better Business Bureau.
In the past year, porch pirates have stolen approximately $12 billion worth of packages, according to Security.org. The security system analysts found that apartment renters experience package theft at double the rate of those who live in single-family homes.
To avoid becoming a package theft victim, experts recommend that you schedule their delivery on a day you’ll be home. You can sign up for tracking notifications from a retailer, UPS, FedEx, and USPS to remind you of the date and time of an expected delivery.
If you can block the visibility of your front door by parking your car in the driveway, that might help keep porch pirates at bay, Officer Drake Madison of the Los Angeles Police Department said.
If you know you won’t be home when a package arrives, LAPD recommends that you ask a trusted neighbor or friend to look out for the package and pick it up for you. Some delivery companies also offer the ability to change when and where a package will be dropped off.
You don’t have to have your package delivered to your home. Many retailers offer the option to have an item shipped to one of their brick-and-mortar stores, and they usually offer pick-ups at a customer service counter or a designated parking space in their lot.
Amazon has pick-up counters or self-service lockers at retailers, grocery stores, and pharmacies. FedEx can hold your packages for up to seven days at one of its retail partners, including FedEx Office, Walgreens, Office Depot, and Dollar General stores.
If you stick with having your packages delivered and you won’t be home to receive them, there are an assortment of lockboxes and secure, oversized mail slots available, although they can be costly. Alternatively, you can install a security camera or doorbell with a built-in webcam, but that won’t necessarily stop the theft. Instead, it can gather the evidence needed to obtain a refund from the shipper and share it with local law enforcement.
“If a specific area is being targeted and everyone makes a report, it shows police where porch thief issues are occurring and will allow them to deploy resources accordingly,” Madison said.