With the rising costs of necessities, buying gifts and holiday events may be harder this year. Many will rely on credit cards and loans to get through the holidays. According to TransUnion, the average American had over $6,000 in credit card debt at the end of September, 2025.
With consumer debt at record levels, it’s important to be smart about using credit to buy things. Here’s some practical tips to avoid the traps leading to holiday debt.
– Set a budget. Write down how much you want to spend on gifts, travel, holiday meals — and stick to it. Treat the amount like a fixed bill (a line in the sand not to be crossed).
– Use cash or a debit card when possible. However, if you must use a card, make paying it off in full at the billing cycle’s end a top priority. That avoids interest piling up.
– If you have to borrow, be strategic. If you need to use credit (for say, a bigger holiday purchase), compare credit card and/or loan terms. A short-term personal loan with a clear repayment plan can be less risky than a high-interest card balance.
– Have a small “holiday fund.” Even a modest amount saved monthly (or from regular income) throughout the year can reduce reliance on borrowing.
– Prioritize high-interest debt. If you’re already carrying balances, focus on paying down the highest-interest accounts first. That helps reduce total interest paid over time.
– Avoid a “minimum payment only” mindset. Paying only the minimum delays payoff (as it generally only covers interest accruing and a nominal amount towards the principal) and increases the amount you owe, often significantly.
– Think long term. Before charging holiday expenses: ask — will I still be paying this off in March? If yes, consider delaying or scaling back.
When one lives in San Diego, or anywhere with a high cost of living, there’s more temptation to over spend – especially around the end of the year. Whether it’s hosting holiday dinners, buying gifts, or planning small getaways. If you’re reading this from the local area, here’s some extra tips:
- Leverage local deals early. Many retailers begin holiday sales before the holidays; buying early (and paying with cash or debit) can reduce last-minute impulse spending. Some stores have digital coupons in their app that you can take advantage of. Don’t have a smartphone? Go to the store’s website and clip those digital deals.
- Use community resources. If unexpected expenses hit (car repairs, medical bills, home maintenance), local non-profits or city resources may sometimes offer payment assistance or grants — avoiding the need to take on high-interest debt. Check social media groups who may be able to direct you to where you can get assistance in your area. Perhaps contact other local services:
- Plan a “holiday budget meeting” with your family/friends. Agreeing on spending limits (or not spending anything) together can ease peer pressure and overspending.
- Wait for the after-Christmas sales. If you’re not meeting the friend or loved one to exchange gifts until after the holidays, you can sometimes catch a good deal after Christmas
Debt can sneak up on anyone, especially when holiday cheer, credit cards, and easy loans converge. If you do decide to use a credit card – make sure you can pay it off. REMEMBER – with awareness, planning, and discipline, it’s possible to enjoy the season without compromising your financial stability.
Are you in need of legal counseling or have any questions about the above topics? The Law Offices of Ian S. Topf, APC offers a free consultation on a variety of issues, ranging from family law/divorce, bankruptcy, and estate planning to criminal/DUI matters and landlord/tenant disputes.