The holiday season is a joyous time of year, but it can also be a time of added financial stress for many consumers. Americans plan on spending $998 on average this year buying holiday gifts, food, decor and other expenses, according to a new survey conducted by the National Retail Federation (NRF).
With supply chain issues and inventory shortages threatening to drive up prices on consumer goods and even groceries, celebrating the holidays may be even more expensive than expected. The good news is that major retailers are taking measures to curb the lack of inventory and boost product availability, according to NRF President and CEO Matthew Shay.
"The retail industry is working diligently with ports, labor, shippers and transportation providers as well as government officials to overcome supply chain challenges and make sure consumers have access to the gifts they want to give and, just as important, receive," Shay said.
Still, it's important to be diligent with your holiday shopping budget to avoid entering the New Year weighed down by holiday debt.
Keep reading for holiday spending tips, including how to consolidate debt when the holiday season has ended. Visit Credible to compare rates on a variety of financial products, including debt consolidation loans, without impacting your credit score.
3 holiday shopping tips to keep spending in check
It's possible to buy the perfect present for everyone on your Christmas list without emptying your wallet. Use these tips to keep your holiday spending under control so you can enjoy this special time of year without added financial stress:
Read more about each shopping strategy in the sections below.
It's easy to lose sight of your spending during the holidays. That's why it's so important to create a budget before you start shopping, according to Lindsey Bell, chief markets and money strategist at Ally Bank.
"The best way to curb impulse buying and last-minute spending is to create a gift-giving list ahead of time and earmark a budget amount for each person," Bell said. "Since no plan is perfect, set aside some cash in a buffer fund for the perfect gift that falls just outside your budget."
Having a strategy for holiday shopping can help keep you accountable and reduce financial stress, she added.
Gifts aren't the only holiday expense, though. You should also account for other common holiday-related costs, said Joe Buhrmann, senior financial planning consultant at eMoney Advisor.
"Don’t forget to include items such as decorations, ingredients for meals and baking, and postage to mail packages in your holiday budget," Buhrmann said. "Also, if you’ll be traveling, don’t forget about gas, hotels and plane tickets to visit family."
Building a budget is only helpful if you can keep track of your progress. There are plenty of free budgeting apps that connect to your bank accounts to automatically track your spending. Some of these apps even offer push notifications so you can get an automated alert if you're close to meeting your spending limit.
"Tracking spending is now as easy as clicking a mouse or opening an app," Bell said.
Budgeting apps aren't for everyone, though. If the tech is too overwhelming for you, consider taking out a lump sum of cash to keep you from overspending.
"It can be easy to overspend if you’re using plastic," Buhrmann said. "Paying cash may force you to be a little more creative when you’re shopping and find more meaningful and personal gifts."
Rewards credit cards help you earn cashback on everyday purchases and even airline miles that you can redeem for holiday travel. If you're planning on staying put this holiday season, you may be able to sell your bonus points to purchase gifts for your loved ones.
"See if you have any credit card reward points from hotel stays," Buhrmann said. "Are there airline points that you’ll never use or accumulate enough of to receive a free flight? Many of these can be cashed in for merchandise or gift cards to help with holiday spending."
Visit Credible to compare rewards cards that can help you afford holiday expenses this year. It's free to browse offers to find the right credit card for you.
How to consolidate debt after holiday overspending
It's easy for even the most thrifty consumers to overspend in the Christmas spirit. But putting holiday expenses on a credit card can be an expensive financing option if you don't pay off your debt in a timely fashion.
Credit card interest rates are near all-time highs, according to the Federal Reserve, reaching 17.13% for all accounts assessed interest in Q3 2021. This means that your unpaid credit card balances over the holidays can be more expensive than ever.
If you've racked up credit card debt this holiday season, consider paying it off at a lower interest rate with a debt consolidation loan. This is a type of personal loan that you pay off in fixed monthly payments over a set period of months.
Unlike credit card rates, personal loan rates are near record lows. The average rate on a two-year personal loan was 9.39% in Q3 2021, the Fed reports.
If you're considering using a personal loan to consolidate holiday debt, it's important to compare offers from multiple lenders to ensure you're getting the lowest rate possible for your situation. You can find your estimated rate on Credible and use a personal loan calculator to see your potential savings.
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