3 Ways to Avoid Credit Card Debt This Holiday Season

A woman online shopping surrounded by Christmas decorations.

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Steer clear of holiday debt with these easy-to-follow tips.

Racking up a balance on a credit card is a dangerous move at any time. But right now, it's particularly ill-advised.

The U.S. economy is stuck in the midst of a raging pandemic and recession. The future of many jobs is uncertain. The last thing you need in the midst of this chaos is a credit card balance to pay off (and interest charges to eat away at your income). The good news: If you follow a few simple rules, you'll avoid getting stuck with credit card debt -- and the unwanted repercussions that come with it.

1. Set a budget and stick to it

Many people aren't sure what they can afford to spend in the first place. To avoid this pitfall, set up a holiday spending budget before you begin gift shopping.

See what your living expenses look like for the next two months. Calculate how much money you have left over in your paychecks to spend. From there, add in any additional money you have access to. For example, perhaps there's some cash in your savings account you can withdraw for holiday purposes.

Once you tally up your total spending allowance, hold yourself to it. Tell yourself that's all you're allowed to fork over in the course of the holidays. If you follow this easy formula, you're far less likely to end up in debt.

2. Set priorities

Say you determine that you can afford to spend $900 on the holidays this year. To make sure you're spending it wisely, create a list of priorities. This can help you avoid whipping out a credit card to cover an expense you forgot.

Start by figuring out what your holiday costs generally include. Order these items from most to least important. If you really want to see family and know it'll take a $300 plane ticket to do so, that's your first priority. If you want to shower six important people in your life with gifts worth $50 apiece for a total of $300, that's your second priority.

From there, you may want to get smaller token gifts for extended family and friends, decorate your house with lights, and send out holiday cards. If you wind up a little shy on funds to accomplish all of that, you'll be less tempted to fall back on your credit cards -- you'll have already tackled the most meaningful expenses.

3. Shop strategically

You'll probably be buying gifts this holiday season. A little strategic shopping could lower your costs -- and reduce the need to rely on your credit cards. Many holiday shoppers assume that the best time to find deals is Black Friday. However, you'll often score deeper discounts in the two-week period leading up to it.

Make a list of items to put on your watchlist. Check out their prices at least once a week. You may find that you can score the best deal outside of a major shopping event.

Also, if you're going to shop in stores, consider pricing out the items you want to buy beforehand. Then, only bring cash with you (in other words, bring just enough to cover those specific things). That way, you'll avoid the temptation to stray from your list.

Don't let credit card debt follow you into 2021

Ending the holiday season with debt is a good way to start the new year off with stress. And in the midst of a pandemic, that's just not what you need. Follow these tips to avoid holiday debt and kick off 2021 without a nagging credit card balance.

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