Suze Orman: 3 Things You Should Never Do When Buying Gifts This Holiday Season
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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The holiday shopping season tends to be an expensive one. This year, the average American plans to spend around $528 on holiday gifts — an amount that could be budget-blowing for some.
As many Americans are prepared to spend hundreds of dollars on gifts, money expert Suze Orman is cautioning against going financially overboard.
“Are you going to give yourself the best possible holiday gift this year? … I am talking about not overspending on gifts — when you spend more than you can afford out of a sense of love or obligation,” Orman wrote in a recent blog post.
“Stop it, right now,” she continued. “You need to put yourself in the equation. I want to remind you of one of my guiding principles: True generosity is when a gift is as kind to the giver as the recipient.”
With this in mind, Orman shared three things you should not do when buying gifts this holiday season.
Charging Gifts You Can’t Afford on a Credit Card
Buying gifts with a credit card can allow you to earn cash back or points, but it’s never a good idea to do so if you won’t be able to pay the balance in full.
“The average interest rate on credit cards right now is more than 22%,” Orman wrote. “That is painful just to write. It is insanely difficult — on top of expensive — to owe that much on an unpaid credit card balance.”
Using Buy Now, Pay Later
Americans are predicted to spend a record $18.5 billion using third-party buy now, pay later (BNPL) services for holiday purchases — an 11.4% increase from last year’s holiday season, according to Adobe Analytics. While using BNPL may be more popular than ever, Orman cautioned against utilizing these services.
“It’s common now when you arrive at the e-checkout for an online purchase to be offered what seems like such a nice deal: you don’t have to pay the full amount but can chunk it out into four interest-free payments,” Orman wrote. “I get the allure of these BNPL offers, but I think they can be dangerous traps.
“One risk is that you buy more because you owe less today,” she continued. “The other problem is that you don’t get the purchase paid off in the allotted payback period — typically four payments — and then the remaining balance is hit with a high interest rate charge.”
Buying Any Gifts If You Already Have Credit Card Debt
If you have high-interest-rate credit card debt, you should forgo gift buying altogether this year, Orman said.
“Don’t ‘but Suze’ me,” she wrote. “If you already have high-rate credit card debt, every dollar of extra money you have should be directed at paying down that debt.”
Instead of spending money on gifts, get creative. Consider regifting something you already have at home or providing a skill or service to those you care about.
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