How to avoid taking on holiday debt
With the holiday season fast approaching, many Americans are already approaching a financial hangover that may well last this new year.
Hallup’s latest forecast shows Americans plan to spend about the same on gifts this year as last year — though the peak ($1,007) is near record highs. A new survey from the American Institute of CPAS (AICPA), meanwhile, finds that nearly half of people who plan to spend on vacations and travel expect to take out a loan to do so. Although many say they intend to spend less, in part because higher prices can mean consumers spend more even if they buy fewer things.
Between gift-giving parties, anniversaries and family outings, vacations are a permanent budget. But this year, many Americans are already grateful for the higher prices on everyday items, with nearly 24 percent of US households still paying premiums by 2025 — a slight uptick from last year. That means holiday spending can add financial stress to consumers who are already feeling overwhelmed.
For many consumers, that spending will come on credit cards. According to an AICPA survey, nearly 79% of people who plan to spend on gifts or travel this holiday season expect to use a credit card, and more than half (52%) say they don’t plan to pay off their holiday balances in full when the money comes. Among those who expect to carry holiday debt, they are expected to take more than six months to pay, and more than three say they will rely on flexible payment options at the moment, pay the latest services (BNPL) to manage the tab.
The type of finance is often combined with emotional pressures as many people report feeling obliged to buy gifts that they cannot afford – a behavior that goes beyond money, it has been called “blame. Some fall into “fomo consumption,” where the desire to keep up with friends or trends and leads to making purchases.
“When money is driven by emotion and not a plan, it can get out of hand,” Dan Snyder, director of personal financial planning at the AICPA, said in the report. “Left the use of money that does not exist, fraud, whether it is gifts, travel or entertainment, can lead to serious financial losses.”
How to budget and avoid unnecessary holiday debt
To create a holiday spending plan, start by budgeting for gifts, travel and entertainment. Be sure to map out what you can afford to spend before Black Friday and Peak Shopping Days, so you don’t get distracted by flash sales. Decide who is buying and how much you are willing to spend on each person – then stick to the list. Even small purchases can quickly add up and lead to the kind of financial hardship you’re trying to avoid. If you like the dopamine hit you get from junk food shopping, you can build that into your system. Set aside $50 or $100 in fun money to cut the itch when you see something you like without blowing your budget.
Many consumers are turning to handmade or DIY gifts as a way to stretch budgets, according to Deloitte’s 2025 Retail Consumer Survey. Designing your own gifts can save you money with the right planning, but it can also backfire if you buy DIY craft kits, overspend on supplies or underestimate the time involved. If you choose to go the DIY route, set a budget for materials, use what you already have, discount stores or discounts – and avoid setting yourself up for failure to make a masterpiece that will be thrown in your hair and no curls.
If you’re planning to travel on vacation, consider using credit card points or miles to help cut costs on flights, hotels or car rentals. Booking early and being flexible with your travel dates can help you avoid sky high prices. In most cases, flying despite of- The holiday itself is cheap, since days before and after major holidays like Thanksgiving, Christmas Eve and Christmas Day are often the best travel days.
Given how many consumers expect to carry balances in the new year, having a plan to manage — and effectively prevent — holiday debt is essential. When it comes to credit card debt, the goal is to pay off the balance as quickly as possible. Interest charges can quickly add up to mountains, turning your balance into a long-term financial burden. If paying in full isn’t possible, set up a reasonable payment plan to get out of debt. Keep in mind that paying off your credit card debt now may require a cut later. If you don’t have extra cash to pay for holiday expenses without subsidizing them, you might not have it in January or February or you’re expecting a big payday.
Finally, be careful with BNPL schemes. While they can be convenient, they also stretch out the holiday bill over several months, making it easy to underestimate how many payments will affect your budget. “Bnpl Multiple BNPL Loans” do not charge interest if payments are made on time, but late payments may incur fees. And some long-term BNPL options charge interest – sometimes at rates comparable to (or higher than) credit cards. The key to staying on top of your due dates and avoid making too many payments at once.
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DIY holiday gifts can save you less money than you think
From rising AI prices to gift ideas, here’s how to beat holiday shopping this year
6 ways Americans are paying for holiday gifts this year
