Many Americans are heading towards the holiday shopping season with a “celebrate now, pay later” mindset. It’s an approach that can find the joy of the season dampened by big bills in the new year.
The latest COUNTRY Financial Security Index surveyed Americans on financial decisions related to holiday shopping. Nearly half of Americans (46 percent) said they plan to use credit cards to pay for holiday expenses this year.
While shoppers may have the best intentions to pay off those cards when the bill comes due, the reality is the holidays put additional financial stress on a budget.
As a result, most shoppers are preparing to spend today and pay tomorrow…or in a month or two. Fifty-two percent of those surveyed said they’re willing to take on some level of debt for holiday purchases. And 26 percent said they’d borrow over $500 for their shopping.
Unfortunately, come January, many Americans will face a “credit card hangover.”
Following a few simple tips can help people avoid an unpleasant surprise when the bill comes due after the holidays.
- Create a realistic spending plan – and stick with it. Remember that the holidays are more than just gifts. Decorations, meals, baking and postage to mail packages all factor in. Plus remember gasoline or airfare to visit friends and families. Keep those costs in mind throughout the year as you save up.
- Only use credit cards for online purchases. If you have to use a credit card, save it for online purchases. Credit cards do have the benefit of some extra fraud protection. Just be careful not to overspend.
- Look for “found money.” See if you’ve got reward points from hotel stays or from your credit or debit card. These can often be cashed in for merchandise or gift cards to help with holiday spending.
Look ahead to next year and create a holiday spending account to help budget in those November and December purchases. It’s never too early to plan ahead.