Debt
How to Pay for the Holidays Without Credit Card Debt in Canada
Set a holiday budget, spread the cost, and if it ends up on your credit card, what it costs to pay off: $1,500 at 20.99% is interest-free if paid in full, but costs $175.95 over 12 months and $1,802.67 on minimum payments.
How do I make a holiday budget?
Set one total you can pay in full in January, then split it: gifts per person, food and hosting, travel, decorations and a small buffer. Write down every purchase so you know where you stand.
If you can, start setting money aside in a savings account a few months ahead so the holidays don’t land on your credit card.
Put it into practiceHow to make a budgetWhat does holiday debt cost on a credit card?
It depends on how fast you pay it back. For $1,500 at 20.99%:
| How you pay it back | Monthly payment | Total interest |
|---|---|---|
| TopIn full by the due date | $1,500 | $0 |
| Over 3 months | $517.60 | $52.78 |
| Over 6 months | $265.53 | $93.15 |
| Over 12 months | $139.67 | $175.95 |
| Minimum payments only (3%) | $45.00 at first | $1,802.67 over 14 years 2 months |
Paying the full statement balance by the due date costs no interest on purchases, thanks to the grace period of at least 21 days.
Which card should I use for holiday shopping?
A card you will pay in full: then rewards are a bonus, often 1% to 2% back or more in some categories. Many cards also include purchase protection and extended warranty on items you buy with them; check your card’s benefits before you shop.
If you already carry a balance, use debit or cash for the holidays instead, since new purchases add to an interest-bearing balance.
Should I use buy now, pay later for gifts?
It can spread the cost without interest if every instalment is paid on time, but several plans at once are easy to lose track of, and missed instalments can bring fees. Count every plan’s payments in your January budget before you agree to it.
I overspent. How do I pay off holiday debt fastest?
Stop adding to the card, pay a fixed amount above the minimum every month and put any extra on the highest-rate balance first. A low-interest card or a balance transfer can cut the interest if it will take more than a few months.
Keep reading
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