You can enjoy the holidays and still protect the progress you have made on your credit history and your budget. This guide walks through why holiday overspending happens, ten practical ways to stay on track, and what to do if you already have holiday debt.
More than a third of Americans, 37 percent, took on holiday debt in 2025, carrying an average balance of $1,223, according to LendingTree. If you are working on building credit or paying down debt, the holidays can be the hardest stretch of the year to stay on plan. Here is how to enjoy the season without losing the ground you have gained.
What's in This Article?
- Why Do People Overspend During the Holidays?
- How Do You Avoid Holiday Debt? 10 Ways to Stay on Track
- What Happens If You Already Have Holiday Debt?
- How Ava Can Help You Build Credit During and After the Holidays
- Frequently Asked Questions
- The Bottom Line
Why Do People Overspend During the Holidays?
A few forces work against your budget at the same time every December.
Social pressure: Nearly half of parents with children under 18, 48 percent, feel pressured to spend more on gifts than they are comfortable with, according to NerdWallet.
Emotional spending: More than half of Americans, 57 percent, say they would be willing to take on debt to make someone they love happy during the holidays, according to ConsumerAffairs.
FOMO: Social media keeps up a steady stream of curated perfection: matching pajamas, elaborate trees, gourmet spreads. It sets a standard designed to make ordinary celebrations feel like they are falling short.
Optimism bias: A quarter of holiday shoppers, 25 percent, say they typically set a budget but admit they probably will not stick to it, according to the AICPA's 2025 holiday spending survey.
Key Takeaway: Knowing these patterns exist will not make you immune to them, but it does make it easier to catch yourself before you overspend.
How Do You Avoid Holiday Debt? 10 Ways to Stay on Track
The short version: plan ahead, set a real number, and protect that number the way you would protect a bill you owe yourself. Here is how to put that into practice.
1. Write Down What You Still Want to Finish This Year
You probably already track your budget in an app or a spreadsheet. There is something more effective about putting your goals on paper too. List what is still in motion: debt you are paying down, savings you are building, habits you are strengthening.
Keep the list somewhere visible. The holidays are a busy season, and it is easy for a list like this to disappear into a drawer. Do not let it.
2. Set a Realistic Year-End Timeline
Once you know what is left, map out what progress looks like between now and December 31. Be honest about what is possible while leaving room for actual life.
A realistic plan keeps you motivated. An overly aggressive one tends to discourage you. Break your goal into small milestones so you are tracking wins along the way, instead of staring at one big finish line in the distance.
3. Celebrate What You Have Already Accomplished
Tight budgets are easier to hold onto when you remember how far you have come. Write down your wins: payments made, balances lowered, habits changed. It feels different when you see it laid out in front of you.
Put the list on your fridge or set it as your phone wallpaper. The point is not to brag. It is to remind yourself that you can do hard things, especially when something shiny is trying to pull you off course.
4. Define What a Good Holiday Actually Means to You
Your best holiday memories probably are not about stuff. They are about people, laughter, and moments that felt warm. Take a minute to picture what would genuinely make you happy this season.
Is it a quiet night in? A family tradition? A meal you love? When you know what you want emotionally, you are less likely to chase what an ad says you should want materially.
5. Budget for Joy on Purpose
Staying on track does not mean cutting out all the fun. It means planning for it intentionally. Decide what you can spend guilt-free, and treat that number like a boundary, not a suggestion.
Building a fun-money line into your budget helps you enjoy the season without slipping back into old habits. The goal is intentional spending, not automatic spending.
6. Tell Friends and Family Where You Are At
Sharing this stage of your financial life might feel awkward, but a simple heads-up can reset expectations for everyone involved. "I am staying on a budget this year" is enough. You do not owe anyone a longer explanation.
7. Get Creative With Gifts
Once you have set expectations, shift from pricey gifts to thoughtful ones. Homemade does not mean cheap. It means personal. Bake someone's favorite dessert, make something cozy, put together a photo memory. When hearts and stomachs are full, the size of the gift bag matters a lot less.
8. Make Activities the Main Event
Gifts are fun, but shared experiences outlast them. A board game, a puzzle, a movie marathon, a family tradition you have let slip: these cost almost nothing and create the stories people actually retell.
Most people do not remember the year they got the newest gadget. They remember the night everyone could not stop laughing.
9. Step Outside Together
The season is hectic, and fresh air is a natural reset. Go for a walk, take a short hike, wander a neighborhood with lights up. These moments cost nothing and still feel like something. Movement, even casual movement, is also a simple way to lower stress and lift your mood.
10. Practice Saying No Without Guilt
You do not have to attend every event, buy every gift, or follow every trend. "No" is a complete sentence, and a powerful one when your goals are on the line.
The right people will not pressure you to overspend. They will respect your boundaries. Protecting your progress now means giving yourself a freer, less stressful stretch ahead.
What Happens If You Already Have Holiday Debt?
First, do not panic. You are not alone, and there are clear steps you can take.
Prioritize high-interest balances first. The average credit card interest rate is running above 20 percent right now, closer to the mid-20s according to Forbes Advisor's ongoing rate tracking. Put as much as you can toward the highest-rate card while making minimum payments on the rest.
Consider a 0% APR balance transfer card if your credit qualifies. It can buy you breathing room to pay down the principal before interest starts piling back on.
Avoid stacking BNPL loans. Buy now, pay later plans can feel low-stakes, but multiple overlapping installments add up fast. Starting in 2025, FICO began incorporating BNPL data into some of its credit scoring models, which means these loans can factor into your credit file more directly than they used to.
Communicate with your lenders. Many credit card issuers offer hardship programs with options like deferred payments or temporary rate reductions. You will not get them if you do not ask.
Key Takeaway: According to LendingTree, 63 percent of people carrying holiday debt say it takes three months or longer to pay off, and 40 percent are paying interest rates of 20 percent or higher on that balance. The sooner you attack it, the less it costs you.
How Ava Can Help You Build Credit During and After the Holidays
Managing the holidays without losing ground on your credit history is easier with the right tool in your corner. That is where Ava comes in.
The Ava Credit Builder Card works like a standard credit card but with built-in guardrails: a spend limit inside your overall credit line, and no interest charges on the card itself. Ava's flat membership fee applies to access the product. On-time payments and low utilization are reported to all three major credit bureaus: TransUnion, Equifax, and Experian.
Because Ava reports your payment activity and tradelines to the bureaus, using the card responsibly during the holidays, and paying it down afterward, becomes part of your credit history rather than working against it. Your credit score may increase or decrease: Ava cannot guarantee results.
Frequently Asked Questions
How much holiday debt do Americans take on average?
In 2025, Americans who took on holiday debt carried an average of $1,223, up from $1,181 the year before, according to LendingTree. Parents with children under 18 carried even more, an average of $1,324.
How long does it take to pay off holiday debt?
According to LendingTree's 2025 survey, 63 percent of people with holiday debt say it takes three months or longer to pay off, and 40 percent are carrying that debt at interest rates of 20 percent or higher.
Is it worth using a credit card for holiday shopping?
Using a credit card is not inherently a problem, especially if you earn rewards and pay the balance in full. The risk is carrying a balance at a high interest rate into the new year. If you are working on building credit, look for a card built around guardrails, like a spend limit and bureau reporting, rather than one that leans on interest charges.
How can I build credit while managing holiday spending?
Avoid applying for new credit cards right before the holidays: a hard inquiry can temporarily lower your score. Instead, focus on what you already have: keep utilization low, make payments on time, and consider a credit builder card that reports on-time payments to the bureaus without charging interest on the card itself.
What is a hard inquiry, and does it hurt my credit?
A hard inquiry happens when a lender checks your credit report because you applied for new credit. It can cause a small, temporary dip in your score. One or two inquiries is usually not a big deal, but several in a short window, like a stretch of holiday retail card sign-ups, can add up.
The Bottom Line
The holiday season is one chapter. Your financial story is much longer than that.
You do not have to sacrifice your peace in January to impress anyone in December. Every time you choose a boundary over a binge, a memory over a purchase, you are investing in the life you actually want.
Give yourself permission to enjoy the season in a way that fits your goals. You are not missing out. You are building something better, and that is worth protecting.
Written by the Ava Editorial Team
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