Forget bright lights and sugar plums. With prices rising on everything from food to clothing, you may be feeling the pressure this holiday season. High prices are driving up expected spending: People plan to spend about $900 on gifts, food and decorations this holiday season, according to the National Retail Federation.
Whether you need extra money to buy gifts for your children or cover the cost of traveling to visit family, you may be thinking about borrowing money for the holidays. From buy now, pay later apps to personal loans, there are several ways to access funds without derailing your budget.
The holidays can be a magical time, but they also come with a lot of pressure to spend. Gifts, decorations, meals and trips can add up.
Ideally, you should have money saved to cover the cost. But if you weren’t able to save for the holidays, there may be a gap between your expectations for the season and your budget.
Although it is not advisable to go into debt for unnecessary expenses, some people choose to do so due to family pressure or simply because they want to create memories with their children. Regardless of the circumstances, here are some popular options if you need to borrow:
Best for: Those on a fixed salary need a relatively small amount to bridge the gap until payday.
A payroll advance allows you early access to part of your next paycheck. You submit a request to your payroll department and, if approved, your employer issues you a portion of your salary ahead of schedule. The amount of the advance is deducted from your next salary.
Employer payday advances involve no interest or credit checks, although small administrative fees may apply. But accepting a payment advance could leave you without cash for your later needs, since your next paycheck will be a reduced amount. Also note that not all employers allow pay advances or may set limits on the number of times an employee is eligible to receive one.
Best for: Those with reliable jobs who need a short-term way to make $500 or less before the holidays.
Cash advance apps like Dave, Earnin, and Brigit let you get a cash advance on your next paycheck without the high fees of payday loans. With these apps, you can get a relatively small amount (usually $500 or less) up front. When payment is due, the app will deduct the borrowed amount from your bank account automatically on the agreed date.
These apps don’t require credit checks and you can use the cash advance feature more than once. They usually don’t charge interest, but you may have to pay membership, transfer, or late payment fees.
The trick? Cash advance apps can leave you short of money for future bills because the payment is automatically withdrawn from your bank account. If you fall short again, you may end up relying on these apps more frequently, creating a cycle of debt that’s hard to break.
Best for: Those who need to borrow a larger sum but can afford to pay it back within a few weeks or months.
With buy now, pay later (BNPL) apps, like Klarna or Affirm, you can purchase items and pay for them in a series of weekly or monthly installments. These services are available through many major retailers, including Amazon, Walmart, and Wayfair.
You can finance large purchases and, depending on the service and your banking history, you may be eligible to finance items costing several thousand dollars. Depending on the amount financed and the application, you can opt for a term as short as two weeks or as long as 12 months.
Shorter terms, such as three months or less, often do not include fees or interest. However, longer-term loans often charge interest and rates can be quite high (some as high as 35.99%). Additionally, these options require credit checks, so those with bad credit may not qualify.
Best for: Those with good credit who can quickly pay off their credit card balances.
Credit cards are one of the most common ways to finance vacation expenses. With a credit card, you have access to a revolving line of credit, so you can use it over and over again (up to your credit limit). If you pay your balance in full before the due date, you can also avoid interest. And some cards offer rewards for your purchases, so you can earn cash back, airline miles, or points.
With some credit cards, you can take advantage of 0% APR promotional offers and enjoy interest-free for a limited time, such as a 12-month introductory period. This gives you time to pay off a larger balance interest-free.
However, you typically need a good credit score to qualify for a credit card with a promotional APR. If you carry a balance, interest can add up quickly.
Related: How Credit Card Points Can Save You Hundreds on Holiday Gifts
Best for: Those with excellent credit who need a larger amount of cash
A personal loan can be an attractive option; You can borrow a lump sum of cash and repay it over several years. Personal loans typically have lower rates than credit cards, making them more affordable options. Loan amounts can range from $1,000 to $50,000 or more, so you can borrow a larger amount.
Personal loans are unsecured loans, so you typically need good to excellent credit to qualify for a loan at a competitive rate. Some loans have high upfront fees, but these can often be avoided with the right lender.
Taking out a personal loan for vacations is risky. While they are convenient, you could end up in debt for years. Borrowing money for a holiday season could mean you’ll still be making monthly payments in 2030.
If you decide to apply for a loan, compare quotes and loan options from several lenders to find the best deal.
Advice: If you need to get a vacation loan, check with local credit unions. Many credit unions have special Christmas loans or seasonal credit options with lower APRs than you’ll find elsewhere. Find a credit union near you with the Location tool of the National Credit Union Administration.
Borrowing money can help you manage vacation expenses, but finding ways to free up extra money or reduce your expenses is better for your financial health. Use these tips to take shortcuts this holiday season:
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Set a budget: Create a detailed holiday budget, list everyone you need to buy gifts for, allocate money for decorations or travel, and see how much cash you have available to cover your expenses. Creating a plan before you start holiday shopping can help you stay focused and avoid overspending.
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Get a side gig: A seasonal side job can be a great way to generate extra income to pay for vacations without going into debt (or reduce the amount you need to borrow). Wrapping gifts for neighbors, putting up decorations, delivering groceries, and pet sitting are great side hustles.
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Reconsider how you give gifts: The pressure to give expensive gifts can be significant, but it’s not actually a requirement. When money is tight, be honest with your family and loved ones. Suggest alternatives, such as a gift exchange with Secret Santa, or set strict dollar limits on gifts. Giving homemade gifts or secondhand treasures can also be a smart choice.
This article was edited by Alicia Hahn.