25% of Parents Plan to Take on Debt This Holiday Season. Here's Why That's So Dangerous Now

Racking up credit card debt is a move you might sorely regret.

If you've ever closed out the holidays with a giant balance on your credit card, rest assured that you're not alone. There's a lot of pressure to spend money during the holidays, whether it's for decorations, food, travel, or gifts. And if you're a parent, it can be especially difficult to exercise restraint during the holidays, because the last thing you want to do is disappoint your kids and fail to deliver the top items on their wish lists.

But while it's natural to want to make the holidays magical for your children, taking on debt isn't a great way to meet that goal. In a recent Momentive study, 25% of parents said they plan to go into debt this holiday season, compared to 11% of non-parents. But while credit card debt is far from ideal during any given holiday season, it's an especially dangerous and costly thing at this specific point in time.

Higher interest rates could hurt you

The Federal Reserve has been aggressively raising interest rates in an effort to slow the pace of inflation. As a result, it's gotten more expensive to borrow in the form of a credit card balance. And so if you rack up debt on your credit cards this holiday season, you might end up losing even more money than usual to interest charges.

Now you may be thinking, "Well, what if I just charge my gifts and expenses on a 0% introductory APR credit card?" And it's easy to see why that might seem like a good idea.

But do remember that these cards only offer 0% interest for a limited period of time. If you don't pay off your balance by the end of your introductory period, you could end up accruing a lot of interest on your debt.

Also, there's fear that a recession could strike the U.S. economy at some point in 2023. And that could lead to an uptick in widespread job loss.

So, let's say you go with your strategy to charge holiday expenses on a 0% introductory rate credit card, or even on a regular credit card, with the goal of paying off your balance quickly. If you lose your job in 2023, you might struggle to keep up with debt payments. So it's really best to do what you can to close out the holiday season without a credit card balance hanging over your head.

There are other ways to make the holidays special

You may have the best of intentions when it comes to holiday spending for your children. But you really don't want to compromise your family's financial security in the course of buying gifts or celebrating the holidays.

If you have to cut your spending this year to avoid credit card debt, there are still plenty of steps you can take to make the holidays magical. You can invent new traditions, like a scavenger hunt with clues that sends your kids scrambling (in a good way) to find their presents. Or, you can all cozy up for a movie marathon, complete with your kids' favorite treats, from popcorn to candy canes to hot chocolate.

At the end of the day, if you make an effort to make the holidays special, your children are apt to notice that. And that's something to keep in mind before you swipe your credit card for a gift you really can't comfortably afford.