5 expensive credit card mistakes to avoid during the holidays

The holiday season is a time to share joy and create memories. But for many Americans, it also brings financial stress. The extra costs that arise this time of year can result in overspending, and credit cards feel like an easy solution to financing holiday purchases. But with the average credit card interest rate sitting above 23%, any unchecked holiday spending can lead to significant long-term debt. 

While credit cards can be a helpful tool for managing holiday expenses, they also come with risks that can affect your financial stability if used irresponsibly. Certain decisions, like making only minimum payments or maxing out your credit cards, can quickly lead to big issues with your finances due to mounting interest. And if you're already dealing with some high-rate credit card debt, avoiding the big holiday credit card mistakes people make is even more critical.

Fortunately, you can enjoy the holiday season without derailing your financial goals. All it takes is being mindful of the potential pitfalls that can come with using your credit cards during the holidays. 

Start tackling your lingering credit card debt now.

5 expensive credit card mistakes to avoid during the holidays

If you want to keep your financial health in check this holiday season, it's important to avoid these expensive credit card mistakes.

Overspending without a budget

One of the biggest mistakes people make during the holidays is shopping without a clear plan. Whether it's buying gifts or splurging on decorations, the lack of a budget makes it easy to overspend in the excitement of the season. To avoid this mistake, set a realistic budget that covers all holiday-related expenses, not just gifts, and track your spending to ensure you stay within your limits. A budget serves as a financial guide, helping you focus on what's most important without jeopardizing your financial health.

Explore the credit card debt relief options available to you today.

Relying on high-rate credit cards

With the average credit card interest rate at a record high, relying on a credit card to finance your holiday expenses can significantly increase the overall cost of your purchases. For example, a $1,000 holiday shopping spree could cost hundreds more in interest over time if you only make minimum payments. This kind of financial strain can linger well into the new year.

So, explore alternative payment options instead. If you have multiple credit cards, use the one with the lowest interest rate or look for promotional offers like 0% APR. If cash is an option, it can help you avoid interest charges entirely. 

Falling for store credit card offers

Retailers often tempt shoppers with discounts for opening a store credit card during checkout. While saving 10% or 15% on your purchase might sound appealing, these cards often come with high interest rates — the average retail card currently comes with a rate of over 30% right now — as well as restrictive terms and limited usability outside the retailer. 

Before opening a store credit card, think about your financial situation and whether the benefits outweigh the costs. In most cases, it's better to stick with a general-purpose credit card that offers lower rates, better rewards and more flexible redemption options.

Making only the minimum payments

After the holidays, many people will try to ease the burden on their budget by making only the minimum payments on their credit card bills. While this strategy might seem like a way to manage cash flow, it's a costly mistake. Paying just the minimum means the balance accrues interest, turning holiday purchases into a long-term financial burden. To avoid this, pay as much as you can each month. Even an extra $50 or $100 toward the balance can make a big difference.

Ignoring payment deadlines

The busy holiday season can make it easy to overlook payment due dates, but missing even one payment can result in late fees, penalty APRs and damage to your credit score. If you're juggling multiple cards, the risk of missing a payment grows.

It can help to set up automatic payments or calendar reminders to ensure you don't miss deadlines. If possible, you should also aim to pay your balance early to stay ahead of holiday bills. This simple step can save you from unnecessary fees and help you maintain a strong credit score.

Overlooking your debt relief options

If you're already carrying significant credit card debt, adding any holiday spending to the mix can lead to even bigger issues. Rather than ignoring the problem or adding to it, you may want to explore your debt relief options, like debt consolidation or debt settlement, instead. 

Debt consolidation combines multiple balances into a single loan, often with a lower interest rate, making your payments more manageable. Debt settlement can help you to negotiate a reduced payoff amount with your creditors, providing a path to financial relief. These strategies can help you reduce the stress of managing high-interest credit card debt. 

The bottom line

The holidays are meant to be a time of joy and connection, not financial anxiety. By avoiding these costly credit card mistakes, you can celebrate without compromising your financial stability. A thoughtful approach to holiday spending, combined with proactive debt management strategies, will also help you focus on what truly matters — cherishing the season with your loved ones.