SAN DIEGO (KGTV) -- There's a less joyful side to the holiday season: going into debt.
According to a Magnify Money study of last year's holiday spending, Americans racked up an average of $1,054 of debt, a 5 percent increase over last year. The study also found more shoppers put that debt on high-interest credit cards.
“Doesn't surprise me at all, doesn't surprise me at all, in fact, I’m probably guilty of it too," said Jim Vogt, a San Diego State University lecturer. “It’s a hole that’s real easy to get into and hard to get out of.”
Only making minimum payments on that $1,050 of holiday debt will take 63 months to pay off, and could cost around $500 in interest fees.
Vogt says the number one thing consumers should do before holiday shopping is have a plan and create a budget, write a list of who you'll be shopping for this season.
If you are using a credit card, have a plan to pay it off on time.
Vogt also warns of being mindful on Black Friday.
“Black Friday a lot of it is all temptation, something looks good, but it wasn’t what we planned on," said Vogt. “Some deals aren’t as good as they seem, you have to be smart and do your research.”
Smart Shopping Tips:
- Look into layaway programs, but be sure to read the fine print
- Use price drop tools, including Price Alert for Amazon and several more listed here
- Ask your bank or credit union about 'Christmas Club' savings account, money goes in every month but cannot be spent until the holiday season
- Research deals months in advance
If you need more incentive to spend wisely, Magnify Money has a credit card payoff calculator to help you determine how much interest you will pay on your purchases.
When it comes to finding the best credit card rates, CardRates.com offers these “Do’s and Don’s”:
- Do seek out a card with a promotional 0% interest rate on new purchases if you’re in the market for a new credit card for holiday shopping. With the recent rate increase, this can help you avoid costly interest charges on your holiday spending
- Do make sure to verify which types of transactions qualify for the 0% APR promotion. Some offers will include both new purchases and balance transfers, while others will only apply to new purchases
- Don’t assume that “no interest” means “no payments.” You’ll still be required to make at least your minimum required payment each month even if you’re not accruing interest
- Don’t forget to check the regular APR that will kick in when the promotional rate expires. Any balance that remains will start accruing interest at the regular rate