More than one in four shoppers (28 percent) said they plan to take on debt, using either a credit card or a buy now, pay later loan, to pay for their holiday shopping, according to a recent report from Bankrate.com.

This debt can be a burden for a long time after the decorations come down. A survey by NerdWallet found that 31 percent of 2024 holiday shoppers who used credit cards still haven’t paid off their balances.

Credit cards are one of the most expensive ways to borrow money. The average credit card interest rate in August was 21.39 percent for existing accounts, according to WalletHub.

The interest rates on retail credit cards are even higher. A survey by LendingTree found the average APR on a new store credit card is currently 30.58 percent; however, at some stores, the interest rate can exceed 35 percent.

Major retailers want you to use their credit cards, and they offer special signup bonuses if you apply while shopping in their stores or online. The typical offer is an instant discount of 15 to 20 percent on your purchase, which can be a significant savings.

Many store cards also come with perks, such as early access to sales, special promotions, and bonus rewards points or higher cash back.

“Unless you pay off the card in full each month, the discounts or rewards you earn will be quickly outweighed by any interest you accrue,” said Matt Schulz, chief credit analyst at Lending Tree. “Don’t let yourself be pressured by the person behind the counter to make a quick, uninformed decision about getting that card. It’s all part of the game. Don’t play along.”

If you’re interested in applying for a store’s credit card, review the terms and conditions before you go shopping.

Many stores offer cardholders no interest for a specific period (i.e., six, 12, or 24 months). This “special financing” comes with a big catch—deferred interest.

“If you don’t pay the full amount by the time the clock runs out, they charge you retroactively for all of the interest that would have accumulated,” Ted Rossman, senior industry analyst at Bankrate, cautioned on the Consumerpedia podcast. “There are a lot of gotchas with store cards. You really need to be careful at the checkout counter.”

Buy now, pay later (BNPL), promoted as interest-free credit, is growing in popularity. But “it’s still debt,” Rossman cautioned. “You may feel like it’s $20 here, $50 there, or $100 there, but buy now, pay later can add up.”

The BNPL industry has expanded from its “four payments in six weeks” model. BNPL loans for big-ticket items can last six months or longer and come with credit-card-like interest rates of 15 to 20 percent or higher.

Don’t Overdo It

The average shopper plans to spend $890 this year on holiday gifts, food, decorations, and other seasonal items, according to the National Retail Federation’s (NRF) annual consumer survey. That’s 1.3 percent less than last year.

“Time and again, Americans prioritize spending on loved ones for holidays despite economic uncertainty,” said Katherine Cullen, NRF Vice President of Industry and Consumer Insights.

It’s easy to get caught up in the excitement of shopping. Having a list—with dollar amounts next to each person—can help keep you focused and within your budget.

“If you’re satisfying an immediate need and only focused on what you’re buying in the moment, it may seem like those credit card payments and buy now, pay later loans are manageable—but that can add up,” said Bruce McClary, senior vice president for communications at the National Foundation for Credit Counseling (NFCC).

Need some help with mounting debt? Consult with a non-profit credit counselor who can guide you in the right direction. Visit the NFCC website, or call 800-388-2227. The first session is typically free.

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Checkbook.org is a nonprofit organization that helps consumers get good service and low prices. It does this by providing unbiased ratings, advice, and price information. Checkbook is supported by consumers and takes no money from the service providers it evaluates. You can reach Herb at his website, Consumerman.com.