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How to avoid holiday credit card debt

How to avoid holiday credit card debt
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According to the Bank of England, the average UK household spends over £800 more in December, mostly because of the holidays. And if you’re already struggling with credit card debt, the worst thing you can do is add to it by overspending on seasonal treats.

With budgets tight and the economy suffering this year because of coronavirus, there are more reasons than ever to watch what you spend. Here are some tips on keeping those bills under control during the holiday season.

Set up a budget

If you don’t have a holiday budget yet, it’s time to work on one. You’ll need to figure out the money needed not only for gifts, but also for holiday parties and even travel if restrictions allow you to visit faraway relatives. A budget doesn’t have to be complicated – you can simply make a list of your estimated holiday expenses and see if you can financially afford them. 

When it comes to gifts, start by listing everybody you’re buying for and how much you can spend on each gift. Numbers too high? Revise the list until you reach a number you can truly afford. 

If pen and paper aren’t your thing, there are many budgeting apps and calculators you can use to keep track of your expenses and avoid credit card debt. 

Start shopping now to avoid credit card debt

The longer you wait to start buying gifts, the more money you’ll have to spend at once later on. Unless you have a significant amount of money saved up, this is when the temptation to use a credit card usually wins over.

Since you have enough time, start searching online for products on sale, special discounts and unique deals. Discount stores are also great places to visit online right now, before things get hectic in December and all the best gifts disappear.

Be ready to do things differently

If the numbers are higher than you can afford, look for places to cut down to avoid credit card debt. For example, talk to friends and family about organising Secret Santa or setting a spending limit on gifts. Or you can use your talents to bake homemade cookies or knit a pretty hat.

If lots of presents are completely beyond your budget, see if you can compromise with a ‘combined’ gift. For example, you could give a couple tickets to a show or buy video games for a group of siblings rather than getting presents for each person individually. 

Have a plan to pay off the card if you use it

If you do end up using your card during the holidays, sit down and formulate a plan to avoid credit card debt. Maybe you can make January a no-spend month, where you won’t buy anything but the essentials. Any money you save can go directly towards paying off the card.

If you’re going to put holiday spending on your credit card, also make sure you’re being sensible about it. Keep your eyes on the budget while shopping with the card – don’t go bigger or buy additional presents just because you’re using credit. 

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