5 Christmas planning and budgeting tips to cut credit card debt

Christmas credit card debt stalks more than one-third of us into the new year. Here are five simple and practical tips to help you budget this year.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Multi-ethnic adult family celebrating with champagne, talking and dancing in the kitchen while preparing dinner on Christmas Day

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Simply having a wonderful Christmas time is easier said than done if you’re worried about the cost. For more than one-third of us, Christmas credit card debt stalks us well into the new year. This results in a surge in applications for 0% balance transfer cards, according to credit card provider, Vanquis.

But there’s light on the other side of the Christmas tree this year. The Vanquis survey also reveals lockdown has enabled more of us to reprioritise our spending, and nearly a quarter of those questioned are confident about managing their Christmas finances.  

If you’re not quite feeling the same level of confidence, it’s not too late to start Christmas planning and budgeting. So, here are five simple and practical tips that can help you budget this Christmas and cut new year credit card debt. 

[top_pitch]

1. Budget for food, gifts and activities

Christmas should be all about having fun. Sadly, budgeting feels like anything but fun. Nevertheless, a Christmas budget is your friend and will have the greatest impact on reducing credit card debt into the new year. 

Calculate what you can afford to spend this Christmas (not what you’d like to). You can then split this figure and set a budget for food, gifts and activities like seeing Father Christmas or the office Secret Santa.

It’s also a good idea to set aside some funds for last-minute trips and surprises so that you don’t feel like you’re missing out on spontaneous drinks or evenings out. 

2. Decide who’s getting presents this year (and how much you’re willing to spend)

Most of us already know who we’re buying presents for, but often, the gift itself and how much we’ll spend is a little vague. Instead of leaving it to the last minute (and panic buying in a hurry), it’s worth planning now what you might like to buy.

It doesn’t have to be set in stone, but fixing a budget per person and giving yourself an inkling about what to buy will mean you’re on high alert for suitable bargains whenever you shop online or on the high street. 

If you’ve got loads of friends or extended family that expect presents, why not suggest putting a limit on what you each spend?

Another way of avoiding credit card debt is to have a go at making some homemade presents for gifts with a difference.

3. Plan parties and gatherings in advance

If you’re hosting friends and family this year, having a plan can help you avoid spending more than you need and cut the risk of running up credit card debt. 

Consider what food you want to serve and clear out some freezer space so you can take advantage of supermarket offers when they crop up. 

Similarly, think about the decorations you already have and whether you really need any more. If you really do need more, it’s worth checking out online marketplaces before you head to the shops. Plus, if you’ve got kids, make the most of them! Mine are quite happy (and quiet) spending a couple of hours making paper chains out of sugar paper in front of the telly. 

4. Hunt out discounts and sales

A deal is only a deal if you need it. Buying stuff ‘because it was in a sale’ isn’t an example of saving money; it’s an example of how retailers successfully get you to spend your cash.

This is where having Christmas gift lists can really help because it keeps you focused on what you actually need to buy and for whom. There will, of course, be times when you go off-list, but having a starting point means you’re less likely to deviate drastically.

To discover the best offers, head tosites like vouchercodes.co.uk and hotUKdeals.com. Plus, don’t forget about Black Friday and Cyber Monday

[middle_pitch]

5. Use credit wisely to avoid building up credit card debt

Credit cards are undoubtedly very useful, particularly at Christmas time. But the key is to keep spending in check, which should be a natural side effect of planning ahead and budgeting this Christmas. 

But if you’re concerned that your credit card bill is already starting to climb, consider switching to a 0% balance transfer card sooner rather than later. Alternatively, think about a 0% purchase credit card instead. 

Most of us naturally spend more at Christmas, but it doesn’t have to become an event that spirals out of control financially. 

So, grab a pen and paper, settle down with a cup of tea, and start Christmas planning and budgeting now. It really can help save on credit card debt and enable you to look forward to the new year without the ghost of Christmas past lurking around. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »