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The holiday season is full of many things – joyful, sentimental and full of festive energy. But it is not cheap.
October first survey Gallup found that consumers expect to spend about $1,007 during the holidays this year. So it’s good to know what options you have to pay for seasonal expenses, which is an important part of maintaining financial health as we enter 2026.
“As we get closer to Christmas, the pressure to create the ‘perfect festive season’ is starting to build,” said Louise Halliwell, group savings director at financial services firm OSB Group.
“But it is possible to enjoy a warm, memorable Christmas in January without overspending or suffering a financial hangover.”
Three common options for financing large purchases, no matter what time of year, are savings, low-interest credit cards, and Buy Now Pay Later (BNPL),
Be smart about saving
For those consumers who have been fortunate in building up a rainy day fund over the past few years, withdrawing money from their savings account is probably the easiest way to cover the cost of holiday expenses. Halliwell explains that combining your savings with a sensible budget further improves this strategy Independent by email.
“The first option I always recommend is the simplest: look at what you already have in your current and savings accounts and set your total Christmas budget based on that figure,” she said. “Paying with debit rather than credit helps you stick to what you can really afford and avoid the temptation to overspend when emotions run high.”
Once you enter the new year, consider setting aside a “small, regular amount” each month for a 2026 vacation fund, Halliwell advised. Not only does this give you some relief when November and December roll around again, but accessible cash helps you act fast on limited-time sales and offers on days like Black Friday and Cyber Monday.
Sign up for a credit card with a 0 percent interest offer
Many credit cards have an introductory offer where, generally speaking, they charge you no interest on purchases you make in the first six to 15 months that you own your card.
These types of credit cards can be an easy way to break up $1,000 of vacation spending into smaller payments without interest. For example, a $1,000 purchase during the 12-month 0 percent promotion allows you to break your balance into payments of less than $100 per month.
Certified Financial Planner Thomas J. Brock explains that the key to 0 percent offers is to pay them off before the interest starts. Independent by email.
“Making larger vacation purchases through a zero-interest loan can make financial sense, assuming you have enough money to pay off the loan before the end of the promotional period,” he said.
Enroll in Buy Now Pay Later (BNPL) Scheme
The popularity of BNPL schemes has increased rapidly in the last few years. In fact, according to Adobe online shopping data, consumers used $1.03 billion in BNPL funding on Cyber Monday. The plans are popular for good reason – they’re relatively easy to understand and, in some cases, you don’t have to pay any interest.
Traditional BNPL plans split your purchase into four payments over six to eight weeks, in many cases. Your monthly payments are much higher than if you opened a credit card with 0 percent interest for 12 months, but the advantage is that you pay off your balance in six to eight weeks, and, in some cases, no credit check is required to start a BNPL.
Bestselling personal finance author Nicole Lapine explains, “When used responsibly, it’s a great way to maintain cash on hand and not rack up credit card debt.” Independent by email. “The additional options and flexibility allow you to manage your budget while keeping cash on hand for a calmer December.”
Three things to consider when looking for vacation financing
With so many options available for vacation financing, it helps to create a system for deciding which financing option and repayment terms are best for you. Taking some time to ask the following three questions during your planning can help streamline the process.
Can you pay back what you borrow?
It’s tempting to find a funding option you qualify for and then accept the offer so you can start spending. However, before accepting, take a minute to consider what your monthly payment will be and how it will affect your budget.
“If buyers decide they need to use some form of finance, the most important question is whether they can realistically afford it,” Halliwell said. “This means being clear about your existing financial commitments, understanding the level of risk you are comfortable taking, and knowing whether you will have the income in January to cover what you will borrow in December.”
If paying off your financing will put you in a difficult financial position in the coming months, you may need to find a more affordable way to fund your purchase or reevaluate how much you want to spend.
Do you have a long-term mindset?
Short-term thinking during this time of year can put you at risk of choosing a faster but less-favorable funding option, such as a store credit card with a higher annual percentage rate (APR) instead of a low-interest credit card with 0 percent APR on purchases for 12 months.
If you find yourself rushing to make decisions, Halliwell suggests focusing on how your decision will affect you in January.
“Taking a long-term view helps buyers shift their thinking from ‘How can I buy this today?’ Helps in changing. ‘How will I feel about this decision in the new year?'” she said. “When you visualize that moment, you’re more likely to be realistic about your spending and less likely to be left with a financial hangover.”
What is driving your expenses?
If you’re like the millions of others who are browsing online or shopping in person for the perfect gift, you’ve probably felt the constant pressure to spend a little more to step up your gift-giving.
Halliwell challenged shoppers to look past that pressure and think about other factors that are driving their wallet-squeezing spending.
“It is also worth questioning what is driving costs up – is it genuine need, or pressure to meet expectations?” He said. “Often, thoughtful alternatives, cashback tools, discount codes, or small savings adjustments can remove the need to borrow altogether. The magic of Christmas doesn’t come from the price tag; it comes from timing, generosity, and togetherness.”