Guest post by Loretta Kilday

People give attractive gifts to their family and friends during the holiday season. But it won’t be possible without a sufficient budget or spending plan. Holiday expenses may create holiday debts, which might become a problem. As a result, people might face financial hardships to pay off a huge holiday debt burden in 2024.

The overall credit card debt in the US is now $1.08 trillion in 2023. Another research by Debt Hammer indicates that 48% of total citizens may incur more credit card debt than last year. The average credit card interest rate is quite high, too. So, middle-aged people (between 30 and 39) living paycheck to paycheck can not bear such a huge holiday debt load. The Consumer Financial Protection Bureau (CFPB) said credit card companies charged fees of over $25 billion and interest of $105 billion to their customers in 2022. This year, the amount might be getting bigger.

But don’t worry! I am sharing with you 10 ways to manage your holiday spending and how you may avoid holiday debt burdens. These tips may definitely help you avoid credit card debt and lower your financial stress.

Effective strategies to reduce your holiday spending debt for 2024

Create a budget and track your spending

You need to decide how much you can spend on gifts this holiday. When you fix your budget, prepare a list of items to buy as gifts. Add other costs, too, like clothes, holiday decorations, dining costs, movie tickets, etc, that you wish to spend on. Check the total cost, and if it exceeds your budget, cut off some items from the list ASAP. Do not skip a single purchase you made during this holiday.

If possible, avoid your credit cards

As per Bankrate, the average credit card interest rate is 20.72%, which is quite high. So, do not use your credit cards as much as possible. It will also help you to avoid overspending. If you still need to use a credit card, use the one with a lower credit limit.

Use cash in your wallet

Use cash instead of credit cards. Withdraw a certain amount of cash as per your holiday budget. Whenever you go shopping, leave your credit cards at home. Carry the exact amount of cash you need for your holiday spending. Make sure you keep all the purchase receipts. It will help you in case you need a refund or exchange.

Choose thrifting

You can buy used items for gifting on this holiday. This is one of the best ways to save money and reduce holiday spending. Search local thrift shops, online stores, and your social media marketplace.

If you have some good items at home, you may use them as gifts. Items that you no longer use can be useful to others. So, you may select such mint-conditioned items and wrap them. Such items can be old music records, books, artifacts, or valuable postage stamps.

You may also buy tickets to a movie show or concert and use them as gifts. This way you may save a decent amount of money, as well as give a beautiful evening to the other person.

Use an App to track holiday debt

When you go for holiday shopping, make sure you have your credit card app installed on your phone. While buying gifts from a store, you’ll receive alerts on your spending and can keep track in real time. You can also use any good money management app. It will help you to stay updated and notify you when you are about to finish your holiday budget.

Use gift cards while shopping

Gift cards are one of the easy options to get discounts on purchases. Find as many gift cards as you can and use them to buy gifts for yourself and others. You can use these gift cards as gifts, also. But make sure you check the expiration date before using them. You can even resale your unused gift cards at CardCash or Raise and get 70% or 80% of their value.

Avoid buy-now, pay-later apps

Buy-now, pay-later apps typically encourage a buyer to overspend. With this app on your phone, you may buy things without cash. This drastically increases your holiday spending.

Apart from that, these apps may also charge high interest rates and late fees. If you miss a payment, your credit score may also get a hit.

So, you must avoid using these apps and use cash to make holiday spending.

Pay more than the minimum

Now, you know how to reduce your holiday debt by budgeting. Now I am going to tell you what to do when you have a decent holiday debt on you in 2024.

It is obvious that most of your holiday debt will be credit card balances. So, first, handle your credit card balances by paying them on time. If you can’t pay the full amount, pay more than the minimum payments.

Credit card debt usually increases due to the compound interest rate applied by the credit card companies. So, pay more than the minimum amount and lower the outstanding credit card balances as much as possible.

Opt for debt relief options

Calculate how much holiday debt you have and how much you can afford to pay. If you can pay off the entire amount, that is best. But if you can’t, opting for a debt relief option is best for saving money and getting out of debt fast.

Pay off debt using a debt consolidation method. Take out a low-interest personal loan and make full payments on your credit card balances. Later, pay off the loan gradually.

You may also get a balance transfer card and transfer your existing credit card balances into that. Many credit card companies may offer 0% APR balance transfer cards. During the introductory period, you don’t have to pay any interest. But it might charge you a 3% to 5% balance transfer fee.

You can also ask your employers if they offer any financial wellness options you can take advantage of. Many employers today provide Financial Wellness Programs which could include small-dollar loans, free credit counseling, or access to discounts. It doesn’t hurt to ask.

Negotiate with the credit card company

If you are having trouble with holiday debt repayment, you may contact your credit card company. You can elaborate on your problems and ask for late fee adjustments, or request for lowering the interest rate.

You may also explain your financial hardship and negotiate for a settlement. You need to show how much you can afford to pay and settle your debts into a lower amount. But, if you settle debts, it will drop your credit score.

A healthy holiday season

Multiple options exist to reduce and handle holiday debts beyond the above 10 strategies. You must also remember that the real spirit of the holiday is spending quality time with your friends and family. Buying expensive gifts may appear satisfying, but dealing with unaffordable holiday debt isn’t.

Review your credit card statements regularly. If you can pull this off correctly, you may start your new year with total control over your finances. If you can share some more effective holiday debt-busting strategies, feel free to share them with us. 

Author Bio:  Attorney Loretta Kilday has over 36 years of litigation and transactional experience, specializing in business, collection, and family law. She frequently writes on various financial and legal matters. She is a graduate of DePaul University with a Juris Doctor degree and a spokesperson for Debt Consolidation Care (DebtCC) online debt relief forum. Please connect with her on LinkedIn for further information.