Stressed About Holiday Spending? 4 Ways To Control Your Credit Card Debt
Written by
Cynthia Measom
Edited by
Amber Barkley
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A study released by D.A. Davidson in November 2023 found that 71% of Americans are stressed about upcoming holiday spending. This could be partially due to the fact that 40% of credit card owners have higher credit card balances now than they did at the same time last year — plus, 54% aren’t in the habit of paying off their credit balances in full every month.
Keep reading to find out more about the study results and also ways you can minimize financial stress around the holidays.
Celebrating the Holidays Means Spending Money
According to the study, people celebrating the holidays are four times more likely to expect to spend the most on gifts for family and friends (80%) compared to expected expenses on the following items and events:
- Dining out: 21%
- Social events: 20%
- Travel: 17%
- Holiday decorations: 16%
And while 37% of men and 23% of women are expected to shell out more money for gifts for their family members and friends this year than last year, men are more confident than women — 59% versus 48% — that they’ll be able to pay off their credit balances in full during the holiday season.
Out of generational groups, 64% of Gen Zers are confident that they’ll be able to pay their credit card bills in full during the holiday months, compared to the following:
- Baby boomers: 56%
- Millennials: 50%
- Gen X: 47%
Ways To Minimize Financial Stress Around the Holidays
Andrew Crowell, financial advisor and vice chairman of wealth management at D.A. Davidson, offered this advice to minimize financial stress this holiday season.
Have a Plan
“The adage ‘failing to plan is planning to fail’ applies to holiday shopping,” said Crowell. “In other words, going into this festive season of gift giving and charitable donations without a budget and a specific shopping plan can be dangerous.”
Avoid Impulse Purchases
“We have all fallen prey to ‘impulse purchases,’ which we never intended to buy, but in the moment, we succumbed to the whim and put it in our shopping cart anyway,” Crowell said. “Candidly, retailers know this and find clever ways to encourage this behavior through elaborate displays, creating a ‘treasure hunt’ atmosphere within their stores and placing certain items conveniently by the checkout line.”
“Retailers have even found ways to encourage impulse purchasing online by suggesting items ‘you may like’ on their websites. Knowing all this, smart consumers should thoughtfully create a list of the individuals they are shopping for, set a budget amount per person and/or in total, then stick to this plan rather than going into stores or websites unprepared.”
Consider Giving Gifts of Your Time
“Another creative way that consumers can reduce their financial stress around the holidays is by giving gifts of time,” Crowell suggested. “Perhaps you can complete an odd job for an elderly neighbor or family member, host a cookie exchange in lieu of giving neighborhood gifts, make a ‘Good Deed’ coupon book that the recipient could use to ‘cash in’ on errands, hugs or in-home movie nights.”
Consider Donating Property
“For those who have philanthropic intentions this holiday, consider donating property like appreciated stock, parts of a collection or a rare painting in lieu of giving cash,” Crowell suggested. “This latter strategy has the trifecta benefit of helping the charity, avoiding capital gains for the donor and preserving cash in their bank account.”
How To Protect Your Finances This Holiday Season
“Besides the obvious risks of potentially overspending during the holidays and/or building up expensive credit card balances, which will be a stress and drag on finances during the year ahead, the holiday season also comes with increased risk of financial fraud,” said Crowell.
“Scammers and fraudsters know that this is a time of year when consumers are prone to spending and are often distracted and/or impulsive. As a result, there is typically a rise of theft and fraud during this time of year, including phishing e-mails, fraudulent websites and cell phone scams.”
Here are some tips from Crowell to keep your information and assets safe.
Don’t Store Personal and Financial Information
“First, avoid creating unnecessary online accounts, which store personal and credit information,” Crowell advised. “Instead, ‘continue as guest’ when buying online.”
Keep Tabs on Your Credit Card and Banking Information
“Second, frequently check your credit card and banking apps for current activity and make sure they do not include any unknown purchases,” said Crowell.
Avoid Opening New Credit Accounts or Opting for BNPL Plans
“Further, holiday shoppers should be careful not to fall prey to additional credit card offers and/or ‘buy now pay later’ plans, which could sound like a helpful short-term solution to financial pressure but actually create bigger long-term financial stress and strain,” Crowell said.
What To Do If You Overspend This Holiday Season
“Should a consumer find themselves ringing in the New Year with more credit card debt than expected, they should set a New Year’s resolution to immediately attack this problem,” Crowell advised. “First, do some online research… to look for lower credit card and/or loan deals, which might allow for consolidation of accumulated debts into a single, lower-cost plan.
“Next, make a repayment plan that fits your budget but aims to steadily and consistently pay off the accumulated debt as soon as possible.
“Finally, consider any year-end bonus or pay increases as ‘newly found money,’ and plan on applying some or all toward eliminating the accumulated debt to prevent it from being a financial burden going forward.”
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