Back to learn

5 Ways to avoid holiday debt

Rounding it up

  • Turns out you can shower your friends and family with gifts sans stacking up debt. Start by creating your budget early and saving accordingly.

  • Next, make a shopping list so you’re less likely to buy things you don’t need, and monitor your spending.

  • Use a prepaid credit card so you can only spend a preloaded amount. Some cards offer cash back, so take advantage of those.

  • Consider hand-made gifts — both the recipients and your wallet will appreciate them.

5 min read

Gaby Pilson
#budgeting#saving#shopping#cash back

The holidays are right around the corner, which means a whole lot of shopping for our loved ones. This year, let’s go in with a plan that also helps keep your budget in line heading into the new year.

While gift giving during the holiday season is a common way to show others that you care, it may leave your bank account feeling a little tight when all’s said and done. That’s why it’s critical that you know how to avoid holiday debt before you start doling out gifts.

The good news is that there are ways to shower your friends and family with gifts without driving yourself into debt. Up next, we’ll offer our top 5 tips for staying on budget this holiday season so you can avoid that dreaded end-of-year debt.

1. Start planning & saving early

The best way to avoid holiday spending debt is to start saving for your spending as early as possible. To do this, you’ll want to build your holiday spending funds into your budgeting template for the entire year.

You’ll need to have an estimated spending amount in mind before you start to build your budget. Whether it’s $100 or $1,000, knowing approximately how much you want to spend during the holidays from the get-go is essential if you want to avoid debt down the line.

Spending, say, $1,000 on gifts may sound like a whole lot of money (and it is), but if you plan ahead of time, you can break that sum down into reasonable chunks that you can set aside throughout the year. In fact, if you set aside $20 each week of the year, you’ll have $1,000 to spend during the holidays.

If saving $20 a week for holiday spending sounds like too much for your budget, have no fear, you can scale that number back to whatever feels manageable for your personal situation.

Alternatively, you can find other ways to save, such as setting aside RoundUps while using your KOHO prepaid Visa card for your holiday shopping. Doing so will help you save up a nice chunk of change by the holidays without any extra legwork on your end.

"In fact, if you set aside $20 each week of the year, you’ll have $1,000 to spend during the holidays."

2. Make a shopping list & monitor your spending

A sure-fire way to go off budget each holiday season is to purchase things that you don’t actually need. While all those festive add ons you see flash across your screen during checkout might seem super cute, chances are pretty high that you don’t need them.

A few extra dollars here and there to qualify for free shipping (it’s free, right?!) or for stocking stuffers might not seem like a big deal, but those dollars add up quickly, which doesn’t bode well for your budget.

If you want to avoid overspending during the holidays as you shop for gifts, here’s what you need to do:

  • Make a list of all the people you’d like to give a gift to, putting them in order from highest to lowest priority

  • Figure out what you’d like to purchase for each person that’s within your budget

  • Do your research as you shop to make sure that you’re getting the best deal on each item

  • Keep track of your spending in your KOHO app to ensure that you’re not going over budget

  • Adjust your gift list accordingly so that your spending doesn’t exceed your savings

If you’re diligent in doing your research for good deals and if you stick to your shopping list, you may even find that you have some money left over at the end of the year.

After you give yourself a big pat on the back for sticking to your budget, you can then use these funds to treat yourself to something special. Alternatively, you can put that money aside in a savings account and start planning for the future.

3. Use a prepaid Visa card for shopping

Fact: No one likes credit card debt. Despite this, some 41% of Canadians carry a balance on their credit cards each month.

While there’s no shame in taking on debt when it’s necessary, finding ways to keep that debt to a minimum is important. One of the best ways to avoid that dreaded holiday spending debt is to keep your credit cards in your wallet and use your KOHO prepaid Visa card instead.

Using your prepaid Visa allows you to avoid going into debt this holiday season because your spending is limited to the money you actually have on hand. That means it’s impossible to spend more than is in your account, so you can wave bye-bye to debt and hello to financial security.

Plus, using your KOHO card allows you to constantly monitor your spending on the app without risking NSF fees, overdraft charges or additional fees because we don’t like charging you for using your own money.

"Using your prepaid Visa allows you to avoid going into debt this holiday season because your spending is limited to the money you actually have on hand."

4. Take advantage of cash back rewards

Most people go into the winter expecting to spend quite a bit on presents, but the holidays can also be a great time to start saving for the year ahead.

If you’re already using your KOHO prepaid Visa to avoid holiday debt, you can take advantage of the many cash back rewards you get in the form of PowerUps. Everytime you purchase a gift this holiday season with your KOHO card, you instantly earn cash back.

For even more cash back on your spending, take advantage of Partner PowerUps by shopping with our stellar list of merchant partners, and earn extra funds to give yourself a bit of financial wiggle room as you shop this holiday season.

5. Recognize that gifts aren’t your only option

It’s important to recognize that there are other ways to show your loved ones that you care this holiday season besides commercially-bought gifts.

While a nice gift here and there can certainly bring a smile to someone’s face this holiday season, if you’re feeling a bit tight on money, you have other options. Instead of purchasing presents, consider giving hand-made gifts, baked treats, or other low-cost goodies to your friends and family. They’ll appreciate your efforts, and your bank account will, too.

Debt-free festivities this holiday season

The holidays are supposed to be a time of joy and appreciation, not a time to stress over holiday debt. By creating a budget, monitoring your spending, using your prepaid KOHO card, and taking advantage of your cash back PowerUps, you can enjoy yourself this holiday season all while keeping your finances strong and healthy as you move into a new year.

Gaby Pilson

Gaby Pilson is a writer, educator, travel guide, and lover of all things personal finance. She’s passionate about helping people feel empowered to take control of their financial lives by making investing, budgeting, and money-saving resources accessible to everyone.

Recent Articles

What should new Canadian residents look for in a credit card?

Does your credit score matter for Canadian immigration?

Should new Canadian residents get a debit or credit card?

What are the most common credit card perks?

What financial benefits can new immigrants get in Canada?

What are high interest savings accounts?

Related articles

What are the most common credit card perks?

8 mins

Ally Streelman

Don’t leave free money on the table—these credit card perks can mean extra change in your pocket in no time.

What are the most common credit card perks?

8 mins

Ally Streelman

Don’t leave free money on the table—these credit card perks can mean extra change in your pocket in no time.


#credit cards

#cash back





The KOHO Visa* Prepaid card is issued by Peoples Trust Company pursuant to license by Visa Int. *Trademark of Visa Int., used under license. **These services are provided by Service Providers, including Visa, Peoples Trust Company and Galileo Processing. Learn more about your finances with Visa Practical Money Skills.