We get it. Who hasn’t said, “What the heck, it’s the holidays,” when shopping for gifts? The problem comes when the January credit card statement arrives, and we end up thinking something completely different.
That’s one holiday tradition we can all do without. Nate Bacon, PNC Bank’s Head of Credit Cards, offers pointers on how to sidestep the post-holiday credit card blues.
“Credit cards are easy to use, and they’re widely accepted as a form of payment. Unfortunately, that ease of use also makes it easier to get into trouble with excess spending,” Bacon says.
In fact, credit card debt surged by roughly $50 billion during the 2023 holiday season, with credit balances reaching an all-time high of $1.129 trillion at the beginning of 2024.1 How do you ensure the New Year will be just as merry and bright as December? We have some ideas for you.
Make A List. Check It Twice
You don’t have to cut back on joy during the season of giving. Instead, planning ahead can help you avoid last-minute impulse purchases.
“Nobody likes to hear the words ‘budget’ and ‘holiday’ in the same sentence,” adds Bacon. “But the better you understand how much to spend ahead of time, the less likely you’ll need to be a Scrooge when it comes to repaying expenses.”
That means assigning a dollar limit for gifts, not to mention keeping your shopping list in check.
Take A Look Back
If you’re having a hard time establishing a budget, past credit card statements could provide valuable guidance.
“Take a look at your spending from the previous holidays,” Bacon suggests, “including expenses such as travel, dining out, and holiday parties. Doing so will give you a good reality check when it comes to understanding spending habits. It also helps establish a comfort level when it comes to deciding what to budget for in the current year. If, for example, you had trouble paying off your credit cards last year, then that’s a sign that you may need to trim things back a little this year, assuming your financial situation hasn’t dramatically changed since then.”
Your Choice of Credit Card Matters, Too
If you have any rewards credit cards, now is a good time to look at all your cardholder benefits. You may be able redeem points and leverage those to make a substantial dent in your shopping list.
“People sometimes forget how powerful a rewards credit card can be,” Bacon adds. “With some, you can redeem for gift cards, for example. Gift cards make terrific gifts that could also mean a big difference in someone’s life – especially if they’re tightening their own belts after the holidays. Gas gift cards, as another example, could really help someone who spends a lot of time on the road.”
Some of the more popular rewards credit cards provide you with cash back on eligible purchases, either as a rebate detailed on your monthly statement, or as a direct deposit into a checking or savings account.
One example? The new PNC Cash Unlimited® Visa Signature® Credit Card, offering 2% cash back on eligible purchases to help cardholders optimize their spending.
“Our clients want to earn rewards, and they want it to be easy to do so,” offers Bacon. “Our new Cash Unlimited credit card makes earning cash back on all purchases uncomplicated,” says Bacon. “you simply enjoy 2% back on every eligible purchase, no categories to worry about, no opt-in required.”
Some cash back cards offer further amenities. As one example, a key differentiator for the Cash Unlimited credit card is its flexibility when it comes to redemption. Customers can redeem cash back as a direct deposit or statement credit, or for gift cards or travel.
Another thing? Look on your credit card statement for special card-linked offers with retailers. Some of those discounts could make a big difference in how much you spend.
If your rewards card offers points toward travel, you could even use those to contribute to the cost of a trip for someone. Hotel and airline points are often transferrable, which means the recipient could be thanking you long after the holidays have passed.
At the same time, rewards cards may offer discounts with specific retailers or offer a gift catalog where you can redeem points for merchandise. This allows you to give a great gift without spending an extra dime.
Finally, and not to put a damper on the season, the holidays are when fraudsters are especially active. Make sure your credit card’s alerts are activated so you can immediately learn about any suspicious activity—rather than wait to discover it on your monthly statement.
Look For Gift-Wrapped Discounts
Finally, your credit card might offer discounts on specific types of purchases such as gasoline, groceries or dining out. While the discounts often add up to only a few percentage points, every little bit counts at this time of year.
If you’re a savvy shopper, smart credit card use would make your holiday shopping—not to mention your holiday bill paying—a good deal easier.
In short, there are all kinds of simple and easy ways you can celebrate the holidays in 2024 without paying the price in 2025. Follow our suggestions and you may be able to ensure a Happy New Year when it comes to your finances.
