n n n ‘. concat(e. i18n. t(“search. voice. recognition_retry”),’n
As tempting as it might be to shower your loved ones with expensive gifts this holiday season, you should resist doing it – at least with credit cards, experts say.
The surveys imply an increase in credit card debt that could hurt other people for years, those experts warn, and that the total amount will reach a record $1. 08 trillion this year, according to the Federal Reserve Bank of New York. 40 percent of Americans are already starting out. The holiday with more credit card debt than a year ago, a survey by investment bank D. A. Davidson showed last month. And 48% will end the holidays with more debt, according to another survey conducted through Debt Hammer, a site aimed at helping others manage their debts.
Making the situation worse, average credit card interest rates sit at a record high. Delinquency rates also are climbing, especially for those between ages 30 and 39, the NY Fed said. In 2022, credit card companies charged consumers over $105 billion in interest and more than $25 billion in fees, the Consumer Financial Protection Bureau said.
All of those trends are a solution.
“Only spend what you can afford to pay off by your credit card’s due date, if you can manage it,” said John Kiernan, editor at personal finance site WalletHub.
With that in mind, here’s a list of 12 expert-led steps to avoid debt-related hangovers:
On the first day of the holiday shopping season, make a list of other people to give gifts to.
On the second day of the holidays, make a budget. A specific holiday budget can help you avoid overspending, so determine how much you’d like to spend on things like gifts, decorations, food, travel, and tips for service providers. . Use what you spent last year as a starting point. If your income stream decreases this year, think about what you can do differently to reduce costs. You might be able to make automatic savings if, for example, you decide not to travel or host a small Christmas dinner this year.
On the third day of the holiday season, use a budget calculator if you want more than just pen and paper to set limits on your holiday spending.
On the fourth day of the holiday season, give yourself a gift first. Sure, set aside cash for Christmas gifts, but do it for your own finances, such as replenishing an emergency fund or maxing out your retirement contributions.
On the fifth day of the holidays, think of gifts made with love. Cook, knit, sew, or make candles, for example. Or reduce the number of gifts by sending anything that the entire circle of family members can enjoy instead of individual gifts, such as a gift card to their favorite store or a gift basket of delicious treats.
On the sixth day of the holiday season, check expectations. If you want to cut back on expenses, let your friends and family know about the type of vacation you’re planning so they can adjust to the idea that things might be different.
On the seventh day of the holiday season, dedicate yourself to paying entirely in cash. Perhaps it would be easier to say “charge for it,” but for many people, handling physical money makes spending more tangible, leading them to price what they buy higher, said Willie Arroyo, a financial adviser. at Mutual of the Northwest.
On the eighth day of the season, say no to retail cards. Retailers like Best Buy and Amazon will try to lure you with discounts and deferred interest if you apply for your credit card. Don’t be fooled. Unless you’re sure you can afford the balance, you may get your holiday shopping up to 27. 5 times more expensive than you anticipate, as the fees on those cards are some of the highest.
On the ninth day of the season, use your rewards. About 70% of Americans don’t spend them. Consider miles to pay for a plane ticket for your in-laws, or credit card issues to cover gift cards from colleagues or part of the value of an item on your child’s wish list.
On the tenth day of the season, dust off the old gift cards. Forty-seven percent of Americans have unused cards averaging a total of $187 per year, according to a YouGov poll conducted in June. You can use cards to buy gifts, industrialize them, or sell them.
Also, don’t worry if the gift card is several years old, you’ll probably be able to use it. Federal law gives you at least five years to use a card from the time it’s activated, and states can give you even more time.
Also, if you’re buying online and the gift card doesn’t go through because it’s old, call customer service for help. If the representative can’t resolve the issue, don’t be afraid to ask for their manager, who may have more leeway to help you.
On the 11th day of the shopping season, pull out any unused gifts. If you were given something that wasn’t meant for you and is still in perfect condition, don’t hesitate to give it back to whoever you might like.
On the 12th of the holiday season, stop by thrift shopping. You may not be alone. A Morning Consult survey last month showed that 38% of consumers will “definitely” or “probably” buy secondhand gifts. Among those feeling financially stressed, that figure rises to 46%, according to the report.
Medora Lee is a finance, markets, and personal finance reporter at USA TODAY. You can contact her on mjlee@usatoday. com and sign up for our free Daily Money newsletter for personal finance tips and business news Monday through Friday.
This article was printed by USA TODAY: How to Set a Holiday Budget to Avoid Credit Card Debt for Christmas