PFFCU News & Events

Sidestep the Trap of Holiday Debt

According to Experian’s Holiday Shopping Survey in 2016, people understand how easy it is to overspend during the holidays: 

  • 56% said they spend too much during the holiday season
  • 31% have gone into debt from unexpected holiday purchases
  • 43% said the extra expenses make the holidays hard to enjoy

With all the hustle and bustle that comes with buying Christmas gifts for friends, family, and co-workers, it can be tempting to stretch your buying ability by borrowing money. Before you take that step, take a minute to consider that not all lenders are the same. Making the wrong financial decisions now can lead to unnecessary expenses throughout the rest of the year.


Steer clear of quick fixes


No credit check and same day cash can make payday loans or title loans incredibly appealing. The ability to walk in with an empty wallet and walk out flush with cash is a dream scenario. But with the outrageous interest rates and predatory fine print, that dream can easily become a reoccurring nightmare.


Since an overwhelming majority of payday loan recipients are addressing a financial emergency (real or perceived), there is an extremely small likelihood the crisis will be resolved before the loan comes due. This is why the Center for Responsible Lending reports that 76% of payday loans are secured to pay off old payday loans. A quick fix can set a vicious cycle in motion.


What about car title loans? Since they’re secured by physical collateral (your car), title loans may offer a slightly lower interest rate—300% instead of 400% like a payday loan—and seem like a more sensible option. However, when you consider that you could lose your car if you can’t meet the terms of the loan, the risk outweighs the benefit.


When it comes to holiday spending, doing a little advanced planning can be the difference between enjoying a stress-free Christmas season and dealing with an ongoing reminder of a bad financial decision.


Can’t pay cash? Get by with a little help from your (credit union) friends


When it comes to any spending decision, paying in cash is always the best choice. No interest. No financial terms. No debt. However, since cash transactions aren’t always possible, it’s important to make smart choices when borrowing money. In many instances, credit unions may offer small loans with lower interest rates and more flexible terms than traditional banks, especially for borrowers with less-than-perfect credit. Borrowing a small amount of money from a credit union can be a smart way to cover your holiday expenses without blowing up your budget.


Shop smart by planning ahead


Before venturing out on a long road trip, it makes sense to know where you’re going and plan your route. Whether you plot your trip on an old-school map or enter your destination into your GPS app, having a predetermined course saves you from the frustration and danger of getting lost.


Establishing a budget can bring the same sense of safety to your financial plans. So, before you brave the crowds or kick back to shop online, download this helpful budget guide to keep your holiday spending on track!



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