July 14, 2024

Your Holiday Budget Guide: Credit Edition

The holidays aren’t just a busy time for your social calendar. It’s a hectic season for your wallet, too. In all the hustle and bustle, it can be challenging to keep track of your spending. 

Plenty of people pile on debt during the holiday season. Last year, the average US adult went took on $1,549 — a 24% jump from the last year’s festivities.  

Extra spending around the holidays is almost inevitable. You may even need to take out a loan before the big day. But the way you approach the season of spending can help you manage your finances like a pro. Let’s explore the guide below to learn how to budget and use credit wisely this holiday.

Budget to Pay off Your Entire Balance

The credit cards that so many of us carry around in our wallets are tremendous temptations. The average American has access to just over $30,000 across all their accounts. 

Regardless of your limit, it’s all too easy to think of this $30,000 as your own cash, forgetting that it’s really an IOU to the credit card companies. That’s how people wind up carrying enormous balances on their cards that they can’t pay off. Some people spend all year paying off what they spend during the holidays!

All holiday spending catches up with you eventually, so it’s important you manage your expenses before you even use credit. 

The idea here is to budget out your seasonal spending, so you know your limits. Stick to this limit, even if you have more credit available. You only ever want to charge what you can pay off entirely by the due date. 

Understand How Emergencies Fit into This Plan

The thing about the holidays is, you can’t always predict what will come your way. You can wind up having to install a new furnace after the old one breaks down — and that’s after you already used up your budget on seasonal gifts. 

When the unexpected tries to derail your financial plans this holiday season, you might need to borrow a personal loan to cover emergency repairs, vet bills, or medical expenses. In these situations, it’s okay that you can’t pay off your loan in one lump sum by the due date. In fact, most online direct lenders and financial institutions don’t expect you to.

If you check out a financial platform like MoneyKey, you’ll see they offer installment loans online that don’t require lump-sum payments. Instead, they expect borrowers to follow a schedule that outlines multiple payments, each one covering just a portion of the entire principal. 

Be Wary of How You Share Your Information

Like most modern merrymakers, you do most of your holiday shopping online. But online shopping comes with some security concerns, as fraudsters ramp up their scamming during the holidays. To ensure you don’t accidentally share your credit card number and contact details with a fake business, always research the site before you checkout. 

Make sure they have a privacy policy, a closed padlock by their URL (for now — Google has plans to change this icon soon), contact information, and a good online reputation. These details are hard to fake, so they usually suggest you’re shopping from the real deal. 

The Takeaway:

Handling the season’s extra spending is easier when you understand how credit fits into your plans. Follow these tips to minimize your debt this season.

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