How to build a holiday budget to avoid credit card debt at Christmas

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. 

Surveys point to surging credit card debt that could harm people for years, these experts warn, with the total swelling to a record $1.08 trillion this year, according to the New York Federal Reserve.  Forty percent of Americans are already starting the holidays 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 in more debt, according to a different survey by Debt Hammer, a site devoted to helping people manage debt.  

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 those trends point to one 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. 

Learn more: Best credit cards of 2023

With that in mind, here’s a list of 12 steps experts recommend to avoid a holiday debt hangover: