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Personal Finance

Holiday shopping is expensive — here's how to avoid taking on additional debt

It's important to maintain stick to a budget even as you shop for the holiday season.

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If you're wrapping up holiday shopping — or just starting at the last minute — you may be trying your best to avoid going into to debt when purchasing gifts. Taking on too much additional debt can cause multiple negative effects, like a dip in your credit score if your credit utilization is too high. However, the right practices can help you spend within your means and shop for the holidays responsibly.

You'll have to dedicate some time to it, but saving money will be worth it in the long run when it gets you closer to your financial goals. Below, Select details a few tips to stay within budget and minimize your spending. 

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Stick to your budget

You might create a well-intentioned budget at first, but once you get into the heat of shopping, you may find yourself having more people to shop for or making splurges you didn't anticipate. Budgeting will ensure you know where each dollar is going, which can be an effective way of holding yourself accountable. You also want to avoid making a budget but then never looking at it again.

Mint is an app that offers budgeting categorization and tracking. It tells you how much of your budget you have left to spend, and you can make as many categories as you want, like holiday food, decor and gifts. You Need a Budget (YNAB) is another great option that helps you organize your finances by encouraging you to give every dollar a job.

Shop around for the best deals

Sometimes, the price tag you're looking at is the best you'll find. But more often than not, there's a better deal out there. Taking the time to peruse the internet or visit other stores for lower prices on items you need can save you lots of money — especially if you have a lot to buy. It can all add up fast.

Of course, shopping around can be time consuming, but services like Honey or Capital One Shopping can help when it comes to finding discount codes for different retailers, in addition to offering shopping rewards. By taking the time to shop around for the best available price before buying, you can save significant money — sometimes even hundreds of dollars if you're doing a lot of shopping online.

Capital One Shopping

  • Cost

    Free

  • How to save

    Earn Capital One Shopping Rewards on eligible purchases, automatic coupons and price comparisons.

  • How to use it

    Download the Capital One Shopping app or install the browser extension.

  • How to receive your savings

    Capital One Shopping Rewards can be used to purchase gift cards.

Terms apply.

PayPal Honey

  • Cost

    Free

  • How to save

    Get Honey Gold points on eligible purchases, automatic coupons and price comparisons.

  • How to use it

    Download the Honey app or install the browser extension.

  • How to receive your savings

    Redeem Honey Gold points for gift cards.

Terms apply.

Open a new card for cash back and 0% APR

If you do end up needing to use a credit card to float some of your holiday expenses, it can be a good idea to consider using a card that lets you earn cash back that can be redeemed as statement credit. The statement credit can then be used to pay down your bill so you have less to pay out of pocket.

Plus, some cash-back cards offer generous welcome bonuses and a 0% intro APR period, which means you can save on interest charges if you need to finance some of your purchases.

The Chase Freedom Unlimited® lets cardholders earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back! New cardholders earn 6.5% cash back on travel purchased through Chase Ultimate Rewards®, 4.5% cash back on drugstore purchases and dining at restaurants (including takeout and eligible delivery service), and 3% on all other purchases (on up to $20,000 spent in the first year). After your first year or $20,000 spent, enjoy 5% cash back on Chase travel purchased through Ultimate Rewards®, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.

The  Wells Fargo Active Cash® Card is a solid choice for earning unlimited 2% cash rewards on eligible purchases, plus it comes with a $200 cash rewards bonus after spending $500 in purchases in the first three months. This one also has a 15-month introductory 0% APR period on purchases and qualifying balance transfers from account opening (20.24%, 25.24%, or 29.99% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.).

Chase Freedom Unlimited®

On Chase's secure site
  • Rewards

    Enjoy 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery services, 6.5% cash back on travel purchased through Chase Travel, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; and 3% cash back on all other purchases (on up to $20,000 spent in the first year). After your first year or $20,000 spent, enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.

  • Welcome bonus

    INTRO OFFER: Earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back!

  • Annual fee

    $0

  • Intro APR

    0% for the first 15 months from account opening on purchases and balance transfers

  • Regular APR

    20.49% - 29.24% variable

  • Balance transfer fee

    Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, on transfers made within 60 days of account opening. After that, either $5 or 5% of the amount of each transfer, whichever is greater.

  • Foreign transaction fee

    3%

  • Credit needed

    Excellent/Good

  • Member FDIC. Terms apply.

Wells Fargo Active Cash® Card

On Wells Fargo's secure site
  • Rewards

    Unlimited 2% cash rewards on purchases

  • Welcome bonus

    Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months

  • Annual fee

    $0

  • Intro APR

    0% intro APR for 15 months from account opening on purchases and qualifying balance transfers; balance transfers made within 120 days qualify for the intro rate

  • Regular APR

    20.24%, 25.24%, or 29.99% Variable APR on purchases and balance transfers

  • Balance transfer fee

    3% intro for 120 days from account opening then BT fee of up to 5%, min: $5

  • Foreign transaction fee

    3%

  • Credit needed

    Excellent/Good

See rates and fees, terms apply.

Bottom line 

Saving money during the holidays might feel impossible, but there are some ways to ensure you don't overspend because of any holiday expenses. For the most part, creating a budget and actually sticking to it is key. But if you find yourself needing to make a splurge or two, consider seriously shopping around before you settle on one price and use a cash-back card to get statement credits to lower your card balance.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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