Holiday Loans

Holiday Loan Options

Personal loan: It's important to have a budget for holiday spending, but it's easy to fall short of funds during the hectic holiday season. An unsecured holiday loan can provide cash at a reasonable interest rate and you don't have to put up collateral such as your car or home. Personal loans typically have a fixed interest rate and are structured with equal payments made over a specified time period.

Personal line of credit: This option can be risky if you're not careful with budgeting, but it also offers the benefit of paying interest only on amounts drawn against your credit line. A personal credit line can take care of holiday finance needs as needed; after the "draw period," or time allowed for using the credit line expires, you'll have to repay what's owed against your credit line or extend the credit line. In some cases it may be necessary to refinance from one credit line to another. A personal credit line provides a convenient source of cash to back up your holiday spending plans, but it can also lead to excessive spending. Draw up a holiday spending budget and do your best to stick to it. The Consumer Financial Protection Bureau (CFPB) notes that personal credit lines typically have variable interest rates which can change as specified in your loan documents. This creates a 'question mark" in your budget planning as the interest rate for a personal credit line may increase or decrease. Read loan documents carefully before signing to establish how often and by how much a variable interest rate can increase at each adjustment.

Holiday Finance: Tips for Success

The National Foundation for Credit Counseling (NFCC) warns that adding holiday debt to existing credit card debt can strain your finances to their limit.

• Set a budget for holiday spending: it's easy to go overboard on holiday spending. While a holiday loan can help you complete your holiday shopping, it also means taking on debt. Retailers and financial companies may bombard you with offers for credit cards and loans. Planning your holiday finance strategy before shopping can help you stay on track.
• Avoid borrowing more than you can repay. Holiday loans are convenient, but you'll soon have to make payments. If you have doubts about adding another bill to your budget, you may want to revise your shopping list to accommodate a cash-based holiday budget.
• Say no to impulsive purchases and on-the-spot offers of credit: Establish your spending plan before shopping. Stay within the limits of available cash, your Christmas shopping list and your holiday line of credit or loan. Don't open additional credit card accounts or fall for last minute sales. FICO notes that too much new credit can harm your credit scores. Falling for deep discounts can lead to buying beyond your budget.

Enjoy the holidays without worrying about buying everything on everyone's holiday list. If you need extra cash, please use your holiday loan wisely to avoid post-holiday debt headaches.