The holiday season can lead to all sorts of regrets. You might over-indulge and gain some weight or maybe you had a few too many alcoholic beverages and made a fool of yourself. And, of course, seemingly everyone has heard stories of office parties gone wrong sometimes with hilarious and/or humiliating results.

For almost 4 in 10 Americans (39%), though, the holiday season means spending more on holiday gifts than they budgeted for, with 8% spending $500 more than planned, according to a new survey of 1,052 U.S. adults conducted for Affirm. That's a mistake that carries real financial consequences as many of those who overspent may end up paying even more as credit card interest piles up.

A woman in a Santa hat with shopping bags looks annoyed.

Sometimes holiday excess can carry a long-term financial penalty. Image source: Getty Images.

Tax refunds to the rescue?

In total, 26% of Americans plan to use their tax refund to pay off debt including, but not limited to holiday overspending. The numbers are much higher for younger Americans with 45% of those ages 25-34 planning to put their refund toward debt while only 33% of those 35-44 plan to do the same,

One-third (33%) of the group that overspent by more than $500 plan to use their tax refund to pay down their holiday-specific debt. In addition, 25% of Americans feel remorse over how much they spend and 64% of those intend to use their tax refund to pay off holiday or other debt.

Among those surveyed who have overspent, but don't regret it, only 20% plan to use their tax refund to pay off debt. For some, this has become a cycle as over two-thirds (67%) of those who used their tax refund to pay off debt (holiday or otherwise) plan to do so again this year. That's up slightly from 66% the previous year.

A dangerous plan

Running up debt of any sort with plans to use a tax refund to pay it off is a problematic idea. First, it's always possible the you misjudged your tax burden and end up with a smaller refund than you planned on.

Second, getting a tax refund at all is actually a mistake. Planning on one means you knowingly had too much money withheld. That's giving the government an interest-free loan for no reason at all.

It's better to live within your means and work with a tax professional to make sure you have the correct amount of money withheld from your paycheck each week. If you get a refund, make it a small one, and use it to build an emergency fund.

Sometimes, of course, debt happens that we can't avoid. In those situations use any refund to help you get you out of trouble, but don't make it a habit or a plan.

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