Updated November 28, 2014

Christmas Debt Statistics: 5 Tips to Avoid Holiday Credit Card Debt

’Tis the season to be cautious about going overboard with credit card debt. The thrill of holiday shopping and gift-giving can sometimes make us forget about the risk of loading up credit card charges.

When used wisely, credit cards can actually help you manage your money and, in some cases, reward you for your spending in the form of points and cash back. In a CreditDonkey.com survey, 37% of people said they use credit cards to finance their holiday spending. But if you don’t pay attention to how you use your cards, your joyful holiday season could turn into a winter of regrets and loads of debt to repay.

Here are some ways to be smart about credit card spending as you go down your shopping list.

1. Buy a few gifts each week. Instead of waiting until the last moment to do your Christmas shopping, space out your purchases over the weeks leading up to the big day. Then you won’t end up with a long list of things to purchase in a short amount of time, forcing you into quick, irrational buying. If you start early, you can take your time, shop during sales and pay off purchases before they start to accumulate. Moreover, you may be able to spread out your credit card bills from your holiday shopping over more than one month, making the total easier to pay off.

2. Treat credit cards like cash. Don’t spend more on your credit cards than you can afford to pay back by the end of one payment cycle. Pay your balance before any interest has time to accrue, so you still get the benefit of being able to buy something before you’ll have the money to cover it without also having to pay interest.

3. Set a spending limit. Cap your gift-giving budget to an amount that’s affordable for you. Most people plan to set some sort of shopping budget, as 68% of those surveyed do, but not everyone factors in the other irregular expenses that creep up during the holidays and that last well into the new year. Give yourself some wiggle room by looking at other areas in your overall budget where you can cut back. Maybe you can dine out less or reduce how much you spend on leisure for the next couple of months.

4. Be realistic about what you can give. Sometimes you just have to be honest with yourself about what’s doable and what’s not. You may want to give lots of gifts this year, but there are other ways to give if you don’t really have the money to buy them all. Come up with thoughtful gift ideas that keep you from spending too much but still let others know you care. An expensive gift isn’t the only way to show your kindness.

5. Take advantage of cash back rewards programs. If you’re going to use a credit card to do your Christmas shopping, use one that has a rewards program. That way you’ll earn points for your spending that could be used toward a gift for yourself in 2014 – a reward for acting within your limits during the holidays.

Jasmine Williams is a contributing writer at CreditDonkey, a credit card comparison and reviews website. Write to Jasmine Williams at jasmine@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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