6 Key Signs Your Finances Need You To Scale Back Your Holiday Spending This Year
Written by
Nicholas Morine
Edited by
Jenna Klaverweiden
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It’s no secret: The holiday season means major spending, at least as far as U.S. consumers are concerned.
According to Mastercard Economic Institute’s annual forecast, U.S. retail sales are expected to increase 3.6% year over year, and Retail Dive cited Deloitte data indicating growth of between 2.9% and 3.4% year over year — despite the fact that more respondents to an Experian survey indicated they would be curtailing their holiday spending this year as compared with 2024.
Your own finances could be offering signs that you, too, should cut back on holiday spending this year. Here are some of the most prominent warning signs.
You’re Carrying a Credit Card Balance — or Had Your Limit Cut
If you’re carrying a substantial credit card balance, that’s probably a good sign to cut down spending on your gift-giving and hosting duties this holiday season.
The average APR on credit cards with balances incurring interest stood at 22.83% as of August, as Forbes noted, with the Consumer Financial Protection Bureau indicating that “credit card issuers have also sharply increased average APRs beyond changes in the prime rate.”
Beyond that, here’s another credit card-related warning sign: Your issuer has cut your credit limit as a precautionary measure (perhaps hurting your credit score due to utilization issues).
You’re Using BNPL as a Crutch — and Maybe Missing Payments
Buy now, pay later (BNPL) services such as Klarna, Affirm and Afterpay are skyrocketing in popularity, having formed partnerships with most major retailers and e-commerce players.
And as a recent LendingTree survey outlined, nearly half (41%) of BNPL loan borrowers indicated they had made at least one late payment over the past year, up from a still-concerning 34% last year.
Of those who do fail to make BNPL payments on time, according to Federal Reserve figures, over half (57%) were charged extra for having been late.
Another warning sign, according to the Fed: a growing cohort of those who say BNPL loans are the only way they can afford a particular purchase. A full 58% of those who used BNPL said as much, with that statistic rising to 72% for those with an income of less than $50,000.
If either of the two circumstances apply to you, it may be time to rethink your upcoming holiday shopping behavior.
Other Key Signs
Here are some other key signs your finances might not be prepared for a spend-heavy holiday season in 2025:
- You were late on rent recently. Essentials such as utility bills, rent, staple groceries and transportation costs should take precedence.
- You’ve taken a 401(k) hardship withdrawal, or are thinking about doing so. Leveraging your retirement portfolio early in order to fill fiscal gaps is a glaring signal to tighten your overall budget.
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