Common Holiday Credit Card Pitfalls and Their Solutions

Navigating Holiday Credit Card Pitfalls

The holiday season in the U.S. sees a surge in credit usage, marking it as one of the busiest times of the year for credit activities.

Here are some of the most prevalent credit card pitfalls during the holidays, along with effective tips to steer clear of them.

Overspending in the Holiday Spirit

Financial experts in the U.S. highlight that the festive emotions—joy, celebration, and urgency—diminish risk awareness when using credit cards.

This often results in consumers purchasing beyond their means, particularly in stores like Target, Best Buy, and Kohl’s, where deals are aggressive.

The Pitfall

Impulsive spending, paired with seasonal advertising, results in scattered purchases across various stores and online platforms.

Solutions

Establish a personal spending limit that is lower than your credit ceiling. Additionally, focus your purchases on one or two cards and set up automatic notifications from your bank.

Persistent High APR Balances Post-Holiday

The typical APR on U.S. credit cards in 2025 continued to exceed 20% annually. Despite slight declines following Federal Reserve actions, rates remain exorbitantly high for those carrying monthly balances.

The Trap

Following holiday spending, many find themselves only able to make minimum payments in January, leading to increased and extended interest charges.

Solutions

Plan your holiday spending ahead of time and opt for a card that offers a lower APR whenever you can.

Common Misconceptions About “Buy Now, Pay Later” Offers

BNPL (Buy Now, Pay Later) services, provided by companies like Affirm, Klarna, and Afterpay, have seen a surge in popularity in the U.S. However, many users do not grasp the underlying terms.

The Pitfall

While interest-free payments might seem safe, juggling multiple BNPL purchases across various platforms can result in missed deadlines, confusion, and potential penalties.

Moreover, some programs may impose retroactive interest after just one missed payment.

Solutions

Restrict BNPL options to necessary or valuable purchases and set up automatic payments to safeguard against late fees.

Store Cards with Enticing Offers and High APRs

In the U.S., store cards from brands like Macy’s, Walmart, Amazon Store Card, and JCPenney often provide instant discounts at checkout, tempting shoppers to sign up right away.

The Trap

These cards typically have APRs exceeding the national average. The initial discount (like 20% off your first buy) seldom offsets the interest incurred if you carry a balance.

Solutions

Assess if the discount really warrants opening the account. Always pay off your balance in full before the due date to dodge high APR fees.

Misuse or Underuse of Rewards Programs

In the U.S., rewards programs involve various factors like points, miles, cash back, bonuses by category, and special seasonal offers.

During the festive season, these programs can provide impressive benefits—but only when utilized wisely.

The pitfall

People often think that rewards or cash back balance out their expenditures, but this is seldom the case if interest builds up or the chosen card isn’t optimal for the spending category (like travel, groceries, electronics, etc.).

How to resolve it

Identify which card excels in each category prior to making purchases. Don’t pursue points at the cost of accruing interest—it rarely benefits you.

Credit scores can decline due to high credit usage.

The ratio of credit utilized compared to total available credit—the utilization rate—is crucial for the FICO Score. In the U.S., scores exceeding 740 are particularly advantageous for securing mortgages and auto loans.

During the holiday season, overspending can temporarily reduce your credit score.

The pitfall

Using 60–90% of your credit limit can cause a significant drop in your score, even if you consistently pay your bills on time.

How to resolve it

Try to maintain your utilization below 30% whenever possible. Make payments early in the month, before the billing cycle ends.

Increased risk of fraud and scams during the holidays

The holiday season is particularly susceptible to fraud in the U.S. Common scams include fraudulent charities, fake delivery links from UPS/FedEx, and unauthorized purchases from online marketplaces.

The Snare

Shoppers often detect dubious charges too late, leading to unnecessary disputes over payments.

Solutions

Select credit cards offering robust fraud safeguards, like Amex and Discover. Activate transaction notifications instantly. Avoid clicking on suspicious email links.

Written by

Team Editorial