How to Manage Your Holiday Purchases

The holidays seem to arrive earlier yet go by faster every year. As a result, planning and budgeting for your gift purchases is more important than ever.

As a consumer, the most important thing you can do is establish a budget. Determine a number that will allow you to get the gifts you want to give, without affecting your ability to cover your usual household expenses — or going too deeply into debt.

Once you’ve established how much you can spend, how will you pay for your holiday purchases? Here are some options.

1. Plan ahead with a designated savings account.

Many financial institutions offer Holiday Savings (or “Christmas Club”) accounts, which allow you to make automatic deposits of money throughout the year. Once the holiday shopping season arrives (sometime after October 1), you’ll have access to the total amount for your purchases. To get the maximum benefit, you should set up the account early in the calendar year and set aside a specific dollar amount on a regular basis, such as every pay period.

2. Apply for a personal loan.

Personal loans can be a solution if you haven’t built enough savings to make all your holiday purchases in cash. The advantages to a seasonal personal loan are that the interest rate may be lower (especially if you can take advantage of a promotional rate) and the terms shorter than other types of loans. As with all loans, personal loans are subject to approval.

3. Use your credit cards wisely.

Credit cards can be a convenient and efficient way to make purchases. Many credit cards offer either reward points or cash back which, based on your personal preference, you can use to your advantage. While using your credit card for your holiday purchases, be careful with the amount you charge and ensure you can pay the balance in timely fashion — otherwise your holiday bills may linger far into the new year.

To keep more cash on hand during the holidays, consumers who qualify can take advantage of “skip a payment” promotions. Typically, these allow you to skip a monthly loan payment for a small fee. However, the month “skipped” will be added to the end of the installment agreement, and interest will likely continue to accrue.

Knowing your options means you can effectively manage your gift purchases. Having a good plan helps relieve the burden of financial concerns — and lets you enjoy the holidays even more!