How to Pay for Holiday Shopping: The Pros and Cons of 5 Popular Options

The nice news is that you’ve got several options for funding your holiday cheer. The naughty news is that each method comes with its own set of pros and cons.

Before you “add to cart,” let’s take a few minutes to explore five popular ways to pay for your holiday shopping and the pros and cons of each choice so you can determine which one makes the most financial sense for you.

1. Savings

Best for: The organized planner or disciplined saver.

Nice:

• No interest or fees since you’re using your own money.
• Peace of mind. No payments or debt after the holidays.
• Sense of control. You’re sticking to a budget you’ve already set aside.

Naughty:

• You might drain funds meant for emergencies or other goals.
• If you haven’t saved in advance, it may limit what you can afford.

Pro tip: Set up a Holiday Club Account now and contribute a small amount on a regular basis. Next December, you’ll be ready to hit the stores, stress-free!

2. Credit cards

Best for: Shoppers with good credit, a solid plan for paying off the balance or rewards lovers.

Nice:

• Convenience. Accepted almost everywhere.
• Potential rewards. Points, miles, or cashback.
• Purchase protection. Many cards offer fraud protection and return safeguards.

Naughty:

• High interest rates if you don’t pay the balance in full.
• Easy to overspend and lose track of your budget.
• Minimum payments can drag the debt well into the new year.

Pro tip: If you use a card, set a clear spending cap and automate a payoff plan to avoid interest.

3. Holiday loans

A holiday loan is a small personal loan offered by banks or credit unions, specifically for seasonal spending.

Best for: People who want fixed payments and a structured payoff plan.

Nice:

• Fixed interest rate and monthly payments — you know what to expect.
• Lower rates than most credit cards for qualified customers.
• Organizes your spending to one place and makes it easier to track.

Naughty:

• You’re taking on debt for non-essential spending.
• Interest means you’re paying more than the purchase price.
• Requires good credit to get the best rates.

Pro tip: Only borrow what you need and shop around for the best terms.

4. Buy Now, Pay Later (BNPL) services

Best for: Shoppers who need short-term flexibility and can budget for multiple payments. Includes Afterpay, Klarna and Affirm.

Nice:

• No interest if making on-time payments.
• Instant approval with no hard/punitive credit check.
• Convenient for splitting large purchases into smaller chunks.

Naughty:

• Late fees can stack up if you miss a payment.
• Can encourage impulse buying—“It’s only $25 a week!” adds up.
• Overuse can hurt your credit or budget if you juggle too many plans.

Pro tip: It’s OK to use BNPL for one or two planned purchases, but it’s best to avoid signing up for it at every checkout screen.

5. Personal loans

Best for: Larger expenses or consolidating multiple holiday-related costs, like travel and gifts.

Nice:

• Structured repayment with fixed monthly payments
• Lower interest rates than credit cards
• Flexibility — can be used for almost anything

Naughty:

• Longer-term debt that can last 12–60 months
• Loan approval can take time and may affect your credit.
• A strong credit score or collateral may be required.

Pro tip: Think long and hard before taking out a multi-year loan for temporary expenses. If you must borrow, have a clear payoff plan.

There’s no one-size-fits-all solution when it comes to paying for holiday shopping, but there’s an option for everyone. Use our guide to find the best way for you to pay for the season’s expenses this year. Happy holidays!