Is it worth financing your Christmas shopping? Pros and cons of holiday credit

The Christmas season is a beautiful time of year. Streets light up, stores blast Mariah Carey on repeat, and there’s a buzz in the air that makes even the cold Canadian weather feel a little warmer. But let’s be honest—it’s also one of the most expensive times of the year.

From gifts and food to travel and decorations, the holiday price tag adds up fast. And if you’re like many Canadians, you might start to wonder: Should I use credit to pay for all of this?

It’s a tempting option. After all, credit cards and Buy Now, Pay Later apps make it incredibly easy to spend now and deal with the payments later. But before you swipe your card or click “pay in 4,” it’s worth asking: Is financing your Christmas shopping really a good idea?

In this guide, we’ll break down the pros and cons of holiday credit, explore real-life examples, and walk you through a step-by-step plan to avoid starting the new year with financial stress. Whether you’re shopping for a big family, hosting a holiday dinner, or just trying to keep up with gift expectations, this article will help you decide what’s truly worth it—and what might be better left for next year.

Why so many Canadians use credit during the holidays

Let’s start by addressing the reality: you’re not alone if you’re thinking about using credit to manage your Christmas spending.

In fact, a 2024 Equifax Canada survey revealed that over 40% of Canadians planned to use either a credit card or personal loan to help cover the costs of the holiday season. And when you consider the numbers, it’s easy to see why.

According to Retail Council of Canada, the average Canadian spends between $1,400 and $1,800 on holiday expenses. That includes:

• Gifts for family, friends, and co-workers

• Holiday meals and drinks

• Travel to visit loved ones

• Decorations and festive extras

With numbers like these, even people who typically avoid debt may find themselves reaching for the credit card.

And the motivations make sense:

• Managing cash flow in a month full of expenses

• Earning credit card rewards like cash back or travel points

• Taking advantage of interest-free promotions

• Avoiding the stress of cutting corners during a joyful season

But even if credit helps in the short term, it comes with risks—especially if there’s no clear repayment plan in place.

The upsides: Why financing your holidays can make sense

There’s no need to demonize credit—when used properly, it can actually be a smart financial tool. Here are a few situations where using credit during the holidays might make sense:

1. It helps smooth out your cash flow

If December is a tight month for your budget, using credit might give you some breathing room. As long as you have a solid plan to pay it off quickly, credit can help you avoid dipping into savings or going without essentials.

2. You can earn rewards on your spending

Some Canadians use rewards cards specifically to rack up points or cashback during high-spending seasons. If you have a card that gives 2% cash back and you spend $1,500, that’s $30 back—not bad if you were going to spend that money anyway.

3. You can take advantage of 0% interest offers

Around the holidays, some retailers and credit card providers offer no-interest promotions for several months. This can be a great way to space out payments—if you’re disciplined about paying on time.

4. It can help build your credit

If you’re just starting to build credit, using a card and paying it off responsibly can strengthen your credit history, which helps with future loans or mortgages.

🚨 The downside: Holiday credit can become a financial hangover

Now for the not-so-fun part: credit can also trap you in post-holiday debt if you’re not careful.

1. The interest can be brutal

Most Canadian credit cards charge 19.99% to 24.99% interest. That’s steep—especially if you’re only making minimum payments.

Table: Cost of carrying a holiday balance

Based on no new purchases. Source: Credit Canada calculator.

2. You start the new year in the red

There’s nothing worse than opening your January credit card bill and realizing your holiday joy is now a monthly payment plan. It’s a fast way to turn a festive season into a stressful one.

3. Credit encourages overspending

Studies show that people tend to spend more with credit than with cash or debit. Why? Because it doesn’t feel real—at least not until the bill arrives.

4. Your credit score could take a hit

Using a large portion of your available credit—especially if it lingers for months—can hurt your credit utilization ratio. That can impact your credit score, even if you’re making your payments.

📚 Real story: Melissa’s $2,100 Christmas mistake

Let’s take a real example.

Melissa, a 34-year-old from Halifax, used her credit card to cover all her holiday spending in 2023. Between travel, gifts, and hosting Christmas dinner, she spent $2,100.

She figured she’d pay it off “soon,” but life got in the way. Between rent, groceries, and car repairs, she could only afford to pay $100 a month. With 19.99% interest, she ended up paying an extra $389 in interest and didn’t clear her balance until September 2024.

Her words?

“I wish I’d planned ahead. It felt good to spoil my family, but I was still paying for it when summer came around.”

Questions to ask before using credit for Christmas

If you’re considering financing your holiday shopping, pause and ask yourself:

• Do I have a repayment plan in place?

• Am I using a card with high interest or a 0% promo?

• Can I pay this off in under 3 months?

• Am I buying things people actually need or will use?

• Will this spending hurt my 2025 financial goals?

If your answers lean toward “maybe not”, it might be worth rethinking your strategy.

🛠️ Step-by-step: How to shop smart this holiday season

Step 1: Set your budget early

Don’t wait until mid-December. Figure out how much you can comfortably spend without using credit—or how much you can repay within 60-90 days.

Step 2: Make a gift list and cap spending

List everyone you want to buy for and assign a maximum amount per person. Be realistic—and remember that time, attention, and handmade gifts matter more than price tags.

Step 3: Shop the sales (smartly)

Use Black Friday, Cyber Monday, and pre-holiday sales to your advantage. But go in with a plan, not just vibes.

Step 4: Redeem points or rewards

Use any credit card rewards, loyalty points, or gift cards you’ve collected during the year. They’re basically free money if you’ve already earned them.

Step 5: Avoid “Buy Now, Panic Later”

BNPL services might look appealing, but they’re still debt. If you go this route, keep track of what you owe and when.

Comparing your payment options

Should you finance your Christmas?

The answer isn’t one-size-fits-all. Financing your Christmas can work—if you’re intentional about it. It’s all about planning, setting limits, and knowing what you can handle financially in the new year.

Credit can be a helpful tool, but it’s not a solution for overspending. Before you use it, make sure your budget and goals come first, not just the holiday hype.

🎄 Bonus tip: Start next year’s holiday fund in January

Want to make next Christmas stress-free? Set up an automatic transfer of just $25 a week starting in January. By next December, you’ll have $1,300 saved—without even noticing it.

Your future self will thank you.