5 Strategies to Avoid Holiday Credit Card Debt

November to December is the busiest time of the year for retailers and it’s common for consumers to make large purchases. According to the National Retail Federation (NRF), the average person spends nearly $1,000 on gifts and holiday-related things each Christmas.

Although credit cards are a convenient option, it's important to avoid accruing debt during the holiday season. Nikki Grogan, Zions Bank Community Banking relationship manager, recommends five strategies to avoid credit card debt from holiday spending.

Strategy #1 to avoid holiday credit card debt: Start with a firm budget

Although making a budget can be difficult, it sets the foundation to help avoid holiday debt.

“When creating a budget, it’s helpful to review past holiday spending,” says Grogan. “Look back at your spending from the previous year, including what you spent on presents, decorations, travel, Christmas cards and even postage costs. After adjusting for inflation, choose an appropriate budget this year.” 

Strategy #2 to avoid holiday credit card debt: Align your gift list with your credit card’s spending categories

Many credit cards provide you with increased cash back in certain spending categories or offer bonus rewards through participating merchants. You’ll save money if your big holiday purchases fall into these categories.

“After making a budget for each person on your shopping list, you can position yourself to maximize credit card rewards for the holidays,” says Grogan. “Setting your spending categories for the highest-priced gifts this year or shopping at participating merchants can help stretch your holiday budget.”

Strategy #3 to avoid holiday credit card debt: Leverage your credit card cash back or reward points for holiday shopping

The holidays are an ideal time to use your cash back or rewards points towards your shopping list. Some consumers hoard points for years in the hopes of achieving their ultimate prize, but it’s unwise to wait too long.

Many credit cards have expiration dates for points, while for some others, including the Zions Bank Vivid Rewards Visa^® Credit Card¹, the points you earn don’t expire.

“Using your cash back or accumulated rewards points is a smart way to help pay for holiday gifts,” says Grogan. “It’s common to use credit card rewards to buy gift cards from major retailers, which can sometimes be purchased at a discount. And according to the National Retail Federation’s annual holiday survey, gift cards are the top wish list request for nearly six in 10 consumers.” 

Strategy #4 to avoid holiday credit card debt: Pay off your credit card bill in full

Credit cards are a powerful financial tool, but it’s risky to carry credit card debt from month to month. If your goal is to avoid holiday credit card debt, you may want to pay off your credit card bill in full before kicking off holiday shopping.

“Remember that if you pay off your credit card bill in full each month, you won’t have to pay any interest,” says Grogan. “If you make full monthly payments, you could save thousands of dollars annually — money that can be rolled into your holiday budget next year!” 

Strategy #5 to avoid holiday credit card debt: Manage expectations

It’s helpful to set expectations with friends and family members before shopping for the holidays. By setting realistic spending limits, you can stay within your budget.

“There are many unspoken rules about gift giving,” says Grogan. “Managing expectations ahead of time will help you best use your dollars and avoid being caught off guard when you get your credit card statement."

Find out which Zions Bank credit card is the best choice to meet your holiday needs by using our Zions Bank credit card comparison tool, or visit your local Zions Bank branch for more information.

1. Credit cards are subject to credit approval. Terms, conditions and restrictions apply. See a banker for details.