{"id":293325,"date":"2025-11-15T14:19:07","date_gmt":"2025-11-15T14:19:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/293325\/"},"modified":"2025-11-15T14:19:07","modified_gmt":"2025-11-15T14:19:07","slug":"how-to-avoid-the-buy-now-pay-later-pitfalls-of-debt-this-holiday-season","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/293325\/","title":{"rendered":"How to avoid the \u2018buy now, pay later\u2019 pitfalls of debt this holiday season"},"content":{"rendered":"

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. <\/a><\/p>\n

This debt can be a burden for a long time after the decorations come down. A survey by NerdWallet<\/a> found that 31 percent of 2024 holiday shoppers who used credit cards still haven\u2019t paid off their balances.<\/p>\n

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.<\/a><\/p>\n

The interest rates on retail credit cards are even higher. A survey by LendingTree<\/a> 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.<\/p>\n

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. <\/p>\n

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

\u201cUnless you pay off the card in full each month, the discounts or rewards you earn will be quickly outweighed by any interest you accrue,\u201d said Matt Schulz, chief credit analyst at Lending Tree. \u201cDon\u2019t let yourself be pressured by the person behind the counter to make a quick, uninformed decision about getting that card. It\u2019s all part of the game. Don\u2019t play along.\u201d<\/p>\n

If you\u2019re interested in applying for a store\u2019s credit card, review the terms and conditions before you go shopping.<\/p>\n

Many stores offer cardholders no interest for a specific period (i.e., six, 12, or 24 months). This \u201cspecial financing\u201d comes with a big catch\u2014deferred interest.<\/p>\n

\u201cIf you don\u2019t pay the full amount by the time the clock runs out, they charge you retroactively for all of the interest that would have accumulated,\u201d Ted Rossman, senior industry analyst at Bankrate, cautioned on the Consumerpedia podcast.<\/a> \u201cThere are a lot of gotchas with store cards. You really need to be careful at the checkout counter.\u201d<\/p>\n

Buy now, pay later (BNPL), promoted as interest-free credit, is growing in popularity. But \u201cit\u2019s still debt,\u201d Rossman cautioned. \u201cYou may feel like it\u2019s $20 here, $50 there, or $100 there, but buy now, pay later can add up.\u201d<\/p>\n

The BNPL industry has expanded from its \u201cfour payments in six weeks\u201d 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. <\/p>\n

Don\u2019t Overdo It <\/p>\n

The average shopper plans to spend $890 this year on holiday gifts, food, decorations, and other seasonal items, according to the National Retail Federation\u2019s (NRF) annual consumer survey.<\/a> That\u2019s 1.3 percent less than last year.<\/p>\n

\u201cTime and again, Americans prioritize spending on loved ones for holidays despite economic uncertainty,\u201d said Katherine Cullen, NRF Vice President of Industry and Consumer Insights.<\/p>\n

It\u2019s easy to get caught up in the excitement of shopping. Having a list\u2014with dollar amounts next to each person\u2014can help keep you focused and within your budget.<\/p>\n

\u201cIf you\u2019re satisfying an immediate need and only focused on what you\u2019re buying in the moment, it may seem like those credit card payments and buy now, pay later loans are manageable\u2014but that can add up,\u201d said Bruce McClary, senior vice president for communications at the National Foundation for Credit Counseling (NFCC).<\/a><\/p>\n

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<\/a>, or call 800-388-2227. The first session is typically free.<\/p>\n

More from Checkbook<\/p>\n

Checkbook.org<\/a> 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.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"More than one in four shoppers (28 percent) said they plan to take on debt, using either a…\n","protected":false},"author":2,"featured_media":293326,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530],"class_list":{"0":"post-293325","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-personal-finance","10":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/293325","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=293325"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/293325\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/293326"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=293325"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=293325"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=293325"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}