How to limit debt, overspending this holiday season

This content is sponsored by PenFed Credit Union, federally insured by NCUA.

The holidays can bring about many joyous feelings: time with family, traditions, and giving and receiving gifts. But that spirit of giving can often translate to an unpleasant outcome: holiday debt.

Holiday debt is very common, and something many Americans are OK taking on.

About four in 10 (41%) of U.S. adults who celebrate the holidays said they’d be willing to go into debt, or deeper into debt, for shopping, according to a 2021 survey from Of those cardholders who already had credit card debt, 60% said they would add to it for the holidays, the survey found.

It can be easy to get caught up in the excitement of the holidays and overspend, but there are some tips to help rein in holiday expenses and consolidate the debt that may come out of it.

The experts at PenFed Credit Union recommend starting with a budget. A budget can keep your spending in check — whether you plan to spend your funds on gifts, travel, entertainment, donations or any other categories. Start by reviewing what you spent last year and estimate what you can afford this year, PenFed said. You can also set money aside in a holiday fund throughout the year, which can help guide the budget.

“Many financial planners recommend that you don’t spend more than 1-1.5% of your annual income on holiday expenses. So, if you make $50,000, you should keep your seasonal expenses between $500-750,” PenFed’s experts said. (Read more about how to create and follow a holiday budget here.)

With that budget in mind, PenFed recommends tracking how much you spend in each category — such as travel, gifts, and donations — and adjust accordingly. If you spend too much in one category, you can scale back in another, for example. Planning purchases in advance also helps limit impulse buys that can break budgets, PenFed noted.

Don’t miss a chance to use coupons or discount codes to help you get the best deals, too. Check your mail and email, apps or company websites to score deals and help curb any holiday debt. You may need to plan accordingly, so time up your spending with when coupons and discounts are in effect, PenFed recommends.

It may be tempting to turn to credit cards for all holiday expenses, but spending can easily get out of control.

“A good rule of thumb is to only charge something if you have the money in your checking or savings account to comfortably cover it,” PenFed’s experts said. “This strategy helps you stay out of credit card debt and accumulate reward points.”

And speaking of reward points, the holidays can be a great time to cash in those credit card rewards points to help pay for gifts, travel or other seasonal expenses.

Let’s face it – even after redeeming credit card rewards points sometimes holiday debt is unavoidable, but there are options to help you through it. One such option is to get a credit card with a 0% rate, allowing you to pay down your debt interest free over time.

According to the experts at Penfed, if you anticipate using credit to pay for big holiday purchases, consider applying for a card with an introductory 0% financing period. The PenFed Gold Visa card has a 0% introductory APR on purchases made for the first 15 months. Learn more and apply here!

The other option for an interest free or 0% credit card rate is a credit card balance transfer. If you have already paid for holiday purchases with a credit card you have today, then you might consider opening a credit card with a 0% balance transfer offer. With a balance transfer, you can move the debt you are being charged interest on to your new credit card via a balance transfer. Many credit card issuers offer an introductory 0% APR balance transfer usually for at least 12 months, if not more. PenFed has balance transfer options on all four of its credit cards, you check them out here.

If opening a new credit card is not something you are interested in, another option for consolidating holiday debt is to take out a personal loan with better terms through a bank or credit union, according to

Debt consolidation loans are personal loans that offer a fixed interest rate. That means you can combine holiday debt from other credit cards or personal loans into a new debt consolidation loan. Instead of paying several creditors, this type of loan allows you to make one monthly payment over a fixed period, said.

“Be mindful that the lowest interest rates are reserved for borrowers with higher credit scores,” said. “Still, debt consolidation loans are an affordable option if you have good or excellent credit.”

The holiday shopping season can be stressful, but giving yourself the gift of budgeting, planning for expenses and debt consolidation through personal loans can turn anyone from the Grinch to a jolly old soul.

Read more about ways to avoid overspending this holiday season on PenFed Credit Union’s website. PenFed Credit Union is federally insured by NCUA.

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