The average consumer expects to spend $736 on holiday gifts in 2025, a 10% increase from the previous year, according to a Visa Business and Economic Insights survey. To cover holiday costs, consider a holiday loan, but be cautious as borrowing for nonessential expenses can be risky without a solid repayment plan.

Holiday loans are personal loans designed for holiday expenses, such as gifts and travel. They typically offer fixed interest rates, smaller loan amounts, shorter repayment terms, and do not require collateral. Some may come with origination fees, so be sure to understand all terms before borrowing.

Lenders offering holiday loans require good to excellent credit for the best rates and terms. Be wary of predatory lenders that offer approval without a credit check, as they may charge high interest rates and fees. Research all loan options thoroughly to avoid unnecessary costs and financial strain.

Consider alternative financing options like a 0% APR credit card or a “buy now, pay later” service to spread out costs without interest or fees. Be cautious of taking out a personal loan for discretionary expenses, as it could strain your finances in the long run if monthly payments become unmanageable.

Avoid holiday loan debt by saving money throughout the year specifically for holiday expenses. Look for ways to cut back on expenses or boost your income to cover holiday costs without borrowing. Utilize rewards credit cards or redeem cashback rewards to reduce holiday expenses and avoid unnecessary debt.

Read more at Yahoo Finance: Are holiday loans a good idea? What to know before you borrow.