Spend Wisely This Holiday Season and Avoid Credit Card Trouble

A bit of preparation can help shoppers enjoy the season without opening the new year with a stack of credit card statements

• Build a holiday budget that reflects your priorities, focusing on the gifts that matter most rather than everything on your wish list.

• Think twice before signing up for store credit cards just to get a discount, especially if the balance will be hard to pay off quickly.

• Set expectations with family and friends before gift exchange begins, and remember that thoughtful presents do not need to be costly.

The holiday season is a time for celebration, generosity, and time with the people you care about. But gifts, decorations, travel, and gatherings can drive costs up fast.

For many households, everyday expenses already make budgeting difficult, and seasonal shopping can add even more strain.

The good news is that enjoying the season does not have to mean overspending or carrying holiday debt into the new year. With some planning and sensible spending habits, consumers can celebrate without putting their finances at risk.

ConsumerAffairs spoke with Greg Gagne, ChFC, founding member of Affinity Investment Group and a 27-year MDRT member, for practical guidance on creating a holiday budget, handling seasonal sales, and keeping expenses under control.

Avoiding common mistakes

One of the most common holiday shopping mistakes involves budgeting. People either fail to stick to their budget or never set a realistic one in the first place, making it easy to overspend.

“A common issue is underestimating the cost associated with the items consumers plan to buy,” Gagne said.

“Budgets are fine as a guideline, but perhaps reverse engineering the spend is a better approach. What are the top three gifts the individual wants? If you can’t purchase all of them, identify the one you think is best as your gift and cross that against the ‘budget.’ Giving is not about the costs as much as the intent.”

Be mindful of store credit cards

Another quick path to new-year debt is using store credit cards. Gagne cautions shoppers not to sign up for another card without considering the long-term consequences.

“This one is a key!” Gagne said. “Be very careful about opening store credit cards to ‘save,’ because you may save a percentage of the purchase up front, but if you can’t then pay that balance when the bill comes, you will pay more than you saved.”

So what is the better option?

“Use one or two cards so you can best track the total expenses you are incurring while shopping,” Gagne said. “So many spring seasons are spent coaching clients how to get out of these small debts that when put together squeeze cash flow and cause a lot of interest to be paid!”

‘It’s the thought that counts’

Most people have heard that phrase many times. But how should it be applied when talking with family and friends about gifts?

Bringing up gift expectations ahead of time can help avoid awkward surprises and make it clear that the meaning behind a present matters more than the price.

Gagne says the saying still holds true.

“Discuss boundaries before the holidays begin,” he said. “Gifts need not be expensive. A well thought-out, meaningful gift need not break the bank.”