Ho ho hope you’re ready to sleigh credit card debt this season…
Giving is good for the heart, but the stress of holiday debt isn’t. Can holiday giving and little to no additional debt really coexist?
Here, we’ll cover some practical methods to help get you through the season without stacking high-interest debt that will follow you long into the new year.
1. Don’t underestimate homemade gifts
If you’re attending multiple Christmas parties or have a large extended family you’re hoping to spoil with presents, you may consider a more heartfelt gift to pass around. It might cost you some time, but you’ll save a fair amount of money in the process. Plus, a homemade gift or DIY present are often personal gifts that mean the most, taking into account your time and effort.
If you want to go smaller, consider baked goods or homemade goodie bags you can pass out to an entire group. Or, if you have a special friend or grandparent, you might consider making a mindful present, for example, photo coasters, calendars or homemade candles. There are great homemade gift ideas for kids, too. Think craft kits, bubble bath bombs and sweet treats.
Special gifts made at home are often the gifts most remembered — plus, you’ll save yourself some debt heartache.
2. Cash advance apps
Cash advance apps can offer anywhere from $10 to $750 before payday. It’s basically a small, interest-free advance on your next paycheck. Some apps require a subscription fee, others rely on an optional tip, and some apps are mostly free. And these apps don’t check your credit to qualify — you’ll typically just need regular income through direct deposit. Advances typically take between 1 and 3 days to hit your account but are offered instantly for a fee.
This option may not work to cover gifts for a large group. However, if there’s someone special on your list or you’ve run into a required gift after you’ve spent your Christmas budget, a cash advance may be a cheaper option than running up interest-bearing credit cards.
3. Gift games
If you’re hosting or attending a large Christmas party or are part of a family or friend group where you exchange gifts, a present game isn’t a bad idea. Think, white elephant, secret Santa, or drawing names. This way, everyone feels loved without breaking the bank — plus, it adds a little extra fun!
4. Personal loans
Personal loans for the holiday can offer anywhere from $1,000 to $100,000, with APRs ranging from 7.49% to 36%. How much a personal loan will cost you is highly dependent on your credit history and credit score. Plus, these loans are often quick, with some lenders able to approve and fund you within one or two days.
If you’re set on making all the gifts happen this year, this option may be better than charging up multiple higher-interest credit cards. You’ll typically have longer to pay it back and with a lower fixed interest rate than a credit card. Just be sure you can comfortably repay your loan according to the terms set out in your contract.
5. 0% interest credit card
A 0% interest credit card is a credit card that offers a 0% interest introductory rate for the first 12 to 15 months. You won’t be charged interest on your balance as long as it’s completely paid off within the introductory period. However, interest rates generally skyrocket as soon as the introductory period is over.
I’ll cushion this option by saying that every credit card, even 0% interest credit cards, can be a debt trap without a responsible repayment plan. So, if you don’t have the money to pay back a credit card, even a credit card with a 0% interest period, it’s probably best to consider less risky options.
6. Set a budget and stick to cash
The best way to make holiday giving happen without racking up a debt burden is to set a strict budget that makes sense for your finances and stick to it. For some, this may mean $200 or $500. For others, it may mean $2,000, $5,000 or more. Whatever that number is for your finances, responsibilities, and goals, the point is to stick to it.
One helpful way to stick within budget is to pull out your giving budget in the form of cash. Purchase all your gifts with that cash, and once the cash is gone, you’ve reached your gift budget’s limit.
Wrap up
The holidays are for giving, after all, but that doesn’t always mean the most or the biggest items on the market. It certainly shouldn’t mean a sinking debt hole that can trickle into the following years.
You have plenty of options to give gifts that are easy on your pocketbook and other smart borrowing tactics that can help you avoid high-interest credit card debt over the holidays.
