When Borrowing For Gifts Goes Wrong—And How to Take Control
Every year, families promise themselves they won’t fall into the holiday debt trap. But with prices still climbing and festive expectations higher than your credit limit, nearly half of Americans end up putting gifts, groceries, and celebrations on borrowed money. Is taking out loans or using credit cards for holiday shopping ever a good idea? Let’s break down the debt cycle, then build a no-stress, no-surprise holiday budget with concrete steps you can take today—before the spending spiral starts.
1. Understand the Real Cost of Borrowed Cheer
The problem: Holiday borrowing seems harmless in the moment, but it’s easier than ever to rack up debt you’ll regret in January.
“In 2024, 36% of American consumers took on holiday debt, averaging $1,181 per person.” (CNBC)
You could spend months paying off what took only days to enjoy. Every dollar you borrow brings interest and future budget stress. Before you swipe, pause to ask: how would it feel to have no extra bills in the new year?
- Tally up last year’s holiday spending, including gifts, parties, and travel.
- Check your statements for lingering card balances.
- Decide now: How much could you truly afford to spend without borrowing?
Commit to breaking the debt cycle by choosing a cash-or-savings budget this season.
2. Map Out a Festive Budget (Yes, Down to the Spatulas & Stockings)
The easiest way to avoid debt? Name every expense early, then set hard limits.
“The Consumer Financial Protection Bureau recommends creating a holiday spending plan that includes all expenses such as gifts, travel, and decorations to avoid post-holiday debt.” (CFPB)
Mapping out your holiday shopping (even snacks and wrapping paper!) is the fastest way to dodge overspending.
- List every category: gifts, meals, travel, social events, decorations.
- Write your max total and assign spending caps to each area.
- If possible, open a separate “festive fund” savings account. Automate weekly deposits—even $10 makes a difference.
“Automating weekly transfers to a holiday savings account can help accumulate funds and reduce reliance on credit.” (CNBC)
Start your list now, before the deals (and pressure) hit.
3. Put Temptation on Lock: Shop With Cash and a List
When you shop with cash and a precise gift list, impulse buys—and regret—are far less likely.
“Using cash for holiday shopping provides a tangible sense of spending and helps keep financial health in check.” (North Jersey Federal Credit Union)
Every time you stick to cash and a list, you chip away at both holiday stress and debt risk.
- Decide on gift amounts per person, then write down gift ideas before heading to stores or clicking online.
-
“Creating a detailed gift list and sticking to it helps avoid impulse buying during the holiday season.” (North Jersey Federal Credit Union)
- Withdraw your holiday cash total and leave cards at home for in-person shopping.
- Cross off each purchase as you go—on paper or your phone.
“Make a list of gifts and cross them off as you go to avoid overspending.” (CFPB)
If you must shop online with a card, transfer the cash out of your account into your festive fund—for real accountability.
4. Track Every Dollar—And Plan Repayment If You Do Borrow
Sometimes, holiday emergencies or last-minute travel mean using credit. But even if you borrow, a payback plan is non-negotiable.
“The Consumer Financial Protection Bureau advises having a specific plan to pay your credit card bill to avoid post-holiday debt.” (CFPB)
If you know how you’ll repay, you’ll avoid the January panic.
- Log every holiday expense, whether it’s a $5 ornament or a $50 grocery run.
- Decide how much you can realistically pay back each month if you use credit.
- Set reminders on your calendar for repayment dates.
-
“Keep track of what you spend during the holidays to ensure you are on track and sticking to your budget.” (CFPB)
Tracking keeps you in control, not your credit card company.
5. Take Advantage of the Year’s Slowdown—and Set New Traditions
This year, the industry expects smaller holiday spending overall.
“Deloitte forecasts U.S. holiday sales to grow at their slowest pace since the pandemic, projecting an increase of 2.9% to 3.4%.” (Reuters)
“PwC survey: U.S. holiday spending in 2025 is expected to drop 5.3% year-over-year.” (Reuters)
This is the perfect time to suggest lower-cost family events or agree to spending caps with loved ones.
- Host a potluck or homemade gift swap.
- Set a “draw a name” rule for large family groups so everyone buys fewer gifts.
- Talk openly about budgets—many others feel the same pressure and will be relieved by honesty.
Start new traditions that leave you richer in joy, not poorer in cash.
Conclusion: This Year, Make Holiday Memories—Not Holiday Debt
The urge to borrow or spend more than you have is strong—but the relief of starting the new year without holiday bills is even stronger. By setting a solid festive budget, sticking to cash or savings, and tracking every purchase, you turn your holiday into a season of freedom, not regret. Start your budget tonight—even a quick list can break an expensive old cycle for good.