The holiday season is a time of year when Americans gather with loved ones for Thanksgiving, Hanukkah and Christmas celebrations, to name a few.
Often, though, consumers can go overboard
racking up credit card debt on holiday-related expenses, which can cause financial strain well into the new year.
When you need extra cash to cover holiday gifts, decorations and other unexpected expenses, it's important to compare loan options so you're left with manageable payments when the holidays are over.
Compare your options for financing holiday shopping in the sections below, including credit cards and holiday loans. You can compare interest rates for a wide variety of financial products on Credible without impacting your credit score.
3 ways to borrow money for holiday shopping
The best way to pay for everything on your gift list is to save up in advance, but it can be difficult to plan for extra expenses around the holidays. If you need to borrow money, here are a few credit options:
- 0% APR credit cards
- Buy now, pay later financing
- Holiday loans
1. 0% APR credit cards
Credit cards can be an expensive way to finance your holiday shopping list if you only plan to make the minimum payments.
However, you may be able to cover additional expenses without racking up high-interest credit card debt by taking advantage of a 0% APR introductory period
. These promotions give creditworthy borrowers up to 18 months of interest-free credit card spending.
Keep in mind that when the promotional period ends, you'll pay interest on the remaining balance. But if you plan accordingly, it's possible to repay all your holiday debt before the 0% APR period expires
Select major online retailers offer a third-party financing option called "buy now, pay later" (BNPL). Companies like Affirm
, Afterpay and Quadpay allow you to break up your purchase into multiple installments at checkout.
Terms and conditions vary widely between BNPL companies. You may be charged origination fees, late payment penalties and interest rates of up to 30% APR. While some companies won't conduct a credit check, others are dependent on credit approval
If you decide to use BNPL financing
to pay for holiday expenses, be sure to read the agreement carefully so you're not stuck with unfavorable loan terms.
3. Holiday loans
A holiday loan is simply a personal loan that's used to finance holiday purchases. Personal loans
are lump-sum loans that you repay at a fixed interest rate in predictable monthly payments over a set period of months or years.
Compared with credit cards, personal loans have lower interest rates. According to the Federal Reserve
, the average rate on credit card accounts assessed interest was 17.14% in Q3 2021. In comparison, the average rate on a two-year personal loan was 9.39% for the same time period — which is near all-time lows.
Since these loans are typically unsecured and don't require collateral, personal loan lenders determine your interest rate and eligibility based on your creditworthiness. Borrowers with good credit
will be eligible for the lowest possible rates, while those with bad credit may be offered relatively high rates.
Personal loan rates are also dependent on the loan amount and length, so it's important to get prequalified to check your offers before choosing a bank or lender. You can compare rates across multiple lenders at once without impacting your credit score on Credible, so you can rest assured that you're getting the best possible offer for your financial situation.