Christmas gifts on credit is a bad idea

The festive season is a time of joy, family, and fun, but it is also a time of increased spending – sometimes recklessly so. If you tend to lean toward the side of overindulgence, you may be familiar with the daunting prospect of facing the financial consequences of your overspending in the new year.

With the majority of South African consumers having to stretch their income to make ends meet, the bulk of Christmas shopping tends to land firmly on the side of credit. However, buying Christmas gifts on credit is a bad idea! You may think that adding a little more to an existing balance is not a big deal, but every cent added to that balance increases your interest rate and your monthly repayment amount. Let’s not forget that when you shop using your debit card, you receive a string of helpful messages reminding you of how much money you have left after every swipe. Shopping on credit allows you to overlook that since you’re not seeing the real-time effect of your spending habits. 

Reckless spending over the festive season has only increased over the years, and the growing success of Black Friday specials certainly isn’t helping. Whether spending more to compensate for price hikes or simply trying to outdo last year, consumers are putting themselves firmly in the debt trap in an attempt to cover every base. Unfortunately, creating debt in the name of yuletide joy is no different from creating debt at any other time of year, and even the magic of Christmas will not make those growing credit card bills disappear.

A few tips to spend responsibly this Christmas:

• Create a strict budget not only for gifts but for all Christmas related expenses.
• Limit your gift list to only essential people. Alternatively, consider secret Santa or a gift exchange. Your family and friends are likely in the same financial boat as you and may appreciate the suggestion.
• Always use cash.
• Try incorporating creative/handmade gifts instead of store-bought ones.
• Plan for next year. Try to set aside a small amount of money throughout the year to help you cover Christmas expenses. Every little bit saved can make a big difference.

When planning your Christmas gift list – remember to impress loved ones with creativity and not a crazy price tag. If you are struggling under the weight of high debt, consider giving yourself the gift of financial freedom with Debtco Group’s Debt Counselling services.

From all of us at Debtco Group, we would like to wish you and yours a happy Christmas and a financially brighter 2022!