The holiday season is known for being a time of joy and celebration, but it can also be a time of financial stress. Shoppers are expected to spend somewhere between $979.5 billion and $989 billion this year during November and December alone, representing a 2.5% to 3.5% increase over 2023’s holiday spending. 

Meanwhile, consumers are expected to also take on more debt during this time of year, even as outstanding credit card debt continues to spiral upwards, now topping $1.1 trillion in value. Per Deloitte’s Holiday Survey, shoppers are planning to spend about $1,778 per person this year, an 8% uptick from last year, and yet, according to NerdWallet, around 28% of spenders have still not paid off the purchases they made during the 2023 holiday season—yikes. 

74% of holiday shoppers plan to use credit cards to make their purchases (which isn’t inherently bad on its own), but even worse, about 16% will plan to rely on buy now, pay later (BNPL) services to afford their seasonal gifts. 

This sounds like the potential for a financial mess, does it not? It does, but this can be avoided by following some basic principles that can help you stay in budget and out of debt this holiday season. 

4 Holiday Shopping Tips to Keep Your Budget in Check

Tip #1: Use Credit Cards For Good

Credit cards offer numerous advantages over debit cards and cash, especially when used wisely. If you're among the many people planning to use your credit card for holiday shopping, here are some helpful tips to save money and reduce stress.

Consider taking advantage of credit cards that offer both a welcome bonus and 0% APR if you have a planned expense. Many cards provide attractive bonuses when you meet spending requirements within the first few months, making them ideal for holiday shopping. The introductory 0% APR can give you some breathing room, allowing you to spread out payments over time without incurring interest. This feature is particularly useful for managing larger purchases during the holiday season, as it helps ease the burden of paying everything off immediately.

Credit cards with 0% APR intro offers available now:

1. Citi Simplicity—0% APR for 12 months on purchases and 21 months on balance transfers.
   
2. Wells Fargo Reflect—0% APR for 21 months on purchases and balance transfers.
   
3. Capital One Savor One—0% APR for 15 months on purchases.
   

Make sure you have a plan to pay off your balance: The golden rule remains — don’t purchase more than you can afford. Credit cards can be cost-effective thanks to rewards, cash-back, and avoiding interest when used correctly. However, the moment interest starts to accumulate, those benefits quickly disappear.

Earn cashback rewards: Cashback is a great way to get money back on your spending. Many different cashback credit cards are available, so you can find one that fits your spending habits.

Credit cards with the best bang for your buck on cashback:

1. For groceries—American Express Blue Cash Preferred: 6% cashback at U.S. supermarkets on up to $6,000 annually.
   
2. For everyday purchases—Wells Fargo Active Cash: 2% back on all purchases with no spending limit
   
3. For travel—Chase Freedom Unlimted: 5% cashback on travel expenses made through the Chase Travel portal.

Tip #2: Avoid Buy Now, Pay Later (BNPL) Services

The "buy now, pay later" (BNPL) market has surged in popularity over recent years, emerging as an enticing payment option for consumers, and is now valued at over $30 billion globally.

Despite some concerns, BNPL continues to grow and shows no signs of slowing down. According to another recent report, consumers are expected to spend nearly $334 billion through BNPL platforms in 2024, representing a 13% increase from 2023. This figure is projected to balloon to $687 billion by 2028, marking a staggering 108% growth in what is often referred to as "phantom debt."

• While BNPL services can seem like a convenient way to split up payments, they often lead to overspending and unexpected financial strain. These services may encourage you to make purchases you can’t truly afford, and missing payments can result in hefty fees or interest. Instead, stick to using your debit card or a cash-based system for purchases to help you stay within your budget. If you can’t pay for an item in full, it’s a good sign you should reconsider the purchase.
  
• BNPL services are also often used under the misconception that they don’t go on your credit report. While it is true that most BNPL services don’t report to credit bureaus, these “phantom debts” can and will still be reported if your account becomes delinquent or sent to collections—they are not a get-out-of-jail-free card.
  
• Also worth noting is the fact that BNPL transactions can carry interest rates that are even higher than those of credit cards, with some rates reaching as high as 36% for certain borrowers.

Tip #3: Set a Budget and Stick to It

Establishing a clear budget for your holiday shopping is one of the most effective ways to manage your expenses and avoid financial stress—in fact, not having a limit in mind and just “figuring it out as you go” is a primary cause of overspending. 

Start by determining a realistic total amount you can afford to spend, considering all holiday-related costs such as gifts, travel, and festive meals. Break this total down into specific categories and allocate funds accordingly. By committing to this budget and tracking your spending, you’ll be less likely to make impulsive purchases and more likely to enjoy the season without the worry of overspending.

• Determine your total spending limit: Assess your finances to decide how much you can comfortably spend without going into debt.
  
• Break it down into categories: Allocate specific amounts for gifts, food, decorations, and any other holiday-related expenses.
  
• Track your spending: Use a budgeting app or a simple spreadsheet to monitor your expenses in real time.
  
• Budgeting Apps:
  
  1. Monarch
     
  2. YNAB
     
  3. EveryDollar
     
• Adjust if necessary: If you find yourself overspending in one category, reassess your budget to ensure you stay within your overall limit.
  
• Avoid impulse purchases: Stick to your shopping list and resist the temptation to buy unplanned items that can derail your budget.

Tip #4: Don't Overdo It

The holiday season can bring pressure to outdo previous years or to give extravagant gifts, but it’s important to remember that no one wants you to go into debt or experience financial distress just to show your appreciation. 

Thoughtful gifts don’t have to be expensive; in fact, the sentiment behind the gift often means more than the price tag. Focus on what you can reasonably afford and prioritize meaningful gestures over lavish spending.

• Communicate with friends and family: Let loved ones know about your budget constraints and suggest gift exchanges that fit everyone’s financial situation.
  
• Get creative with your gifts: Consider making homemade items or giving experiences that don’t require a large financial commitment.
  
• Focus on quality over quantity: One heartfelt gift can be more impactful than several cheaper items, so choose gifts that truly reflect your thoughtfulness.
  

Remember the true spirit of the season: Shift your focus from material gifts to spending quality time with loved ones, which can create lasting memories without straining your budget.