As the last month of a long, difficult year approaches, it’s no surprise that many of us are feeling the urge to celebrate. Whether it’s Christmas, Hanukkah, Kwanzaa, or Chinese New Year in early 2021, gift giving is one way we show people we care. But without careful planning, a giving spirit and good intentions can turn into credit card debt, which is sure to stick around longer than the holiday season.
While credit card debt has decreased
as a whole during the pandemic, holiday spending may go against our normal spending habits, especially after a difficult year. The easiest way to avoid credit card debt during the holidays is to take a proactive approach to your finances. Keep reading to find out a few tips to help you get started.
Create a Budget
Many Americans are already accustomed to budgeting. In fact, nearly 80% of Americans reported using a budget in a 2020 survey
. But creating a special holiday budget can help manage your finances at a more granular level when it comes to gift giving this year.
Start by taking a look at your expected expenses. And remember this doesn’t only include gifts. Wrapping, packing, and shipping supply costs can add up. And you may find yourself shipping more gifts this year rather than traveling or meeting in person.
Next, look at your current financial situation and determine your holiday spending limit. You can create a list of people you’re shopping for. Then decide how much you’re going to spend on each person’s gifts. Try to stay within your limit. And it’s not a bad idea to keep a little wiggle room for any unexpected gifting needs.
If you had a holiday budget from previous years, remember that this year may look quite different in comparison. Not only is it possible that your financial situation is different, but your holiday activities and social engagements will probably look different, too.
Look for Ways to Save Money
By planning ahead, you’ll likely be able to find ways to save money on holiday gifts. Even if the savings seem small, they can really add up and help you stay within your budget.
While online shopping can come with additional shipping costs that aren’t necessary when shopping in-store, a little bit of planning can help reduce costs. Some retailers offer free shipping on orders over a certain amount spent. Rather than buying two separate gifts on two separate orders, having the foresight to order both gifts together can help save money and packaging.
Use Your Credit Card Wisely
Remember that it’s important to pay off your credit card bill
in full each month in order to establish good credit. And that doesn’t change just because it’s the holiday season.
Make life easier on yourself by sticking to that budget and spending money that you currently have. While the holiday deals may be tempting -- especially for big-ticket items like electronics -- you want to be sure you’re setting yourself up for future financial success. Before making a big purchase on your credit card, ask yourself whether you have the funds to pay for it when you get the bill.
Last year, Americans racked up an average of $1,325
in holiday debt. And more than 75% of survey respondents reported that they wouldn’t be able to pay it off by the end of January. By making only minimum payments on a credit card balance of $1,325, it could take more than five years to pay off and accrue about $600 in interest.
The best approach is to avoid taking on any credit card debt. Not only does it help your current financial situation, but it can pay off in the long run by improving your credit score. This can make your future financial life easier when it comes to getting approved for loans and lower insurance rates.
Monitor Your Spending
When it’s time to shop, keep a close eye on your spending so you can avoid financial surprises
throughout the holiday season. And Digital Banking
can make it easy. If you already have a checking account, there’s a good chance you already have access to Digital Banking right at your fingertips.
- Streamlined Access - More intuitive experience that works similarly across all devices -- mobile, tablet or desktop.
- Enhanced Alerts - Set up, customize and manage alerts the way you want with ease.*
- Mobile Deposit - Deposit checks for free in a snap – safely and securely from a mobile device.** Available on iPhone or Android.
- New Payment Tools - Move money to your other accounts through account-to-account transfers. Use bill pay to schedule and send payments. Plus, we’ve partnered with Zelle® so you can easily send and receive money from friends, family and others you trust.*** Learn more about Zelle.
- Secure Messaging - Reach us for questions about your account on any device through secure messaging.*
Academy Bank: Your Financial Partner All Year Long
No matter the time of year, Academy Bank is working hard to be your go-to partner when it comes to your banking needs. We offer several convenient, easy-access options so that you can bank from the safety of your home, phone, or car.
We’re here whenever – and wherever – you need us.