Holiday Spending Alert: Don’t Let Credit Card Debt Steal Your Financial Future
As the holiday season reaches its peak, financial expert Suze Orman is sounding the alarm about the dangers of buying gifts with credit cards. On her Women & Money podcast, Orman warns listeners against letting financial guilt or societal pressures lead them into debt during the season of giving.
The Dangers of “G-Day”
Orman refers to the last ten days before Christmas as “G-Day” or “Gift Day,” when financial guilt and holiday spirit often lead to impulsive spending. She explains that people think they’re saving with discounts, but in reality, most people spend way more and even go into debt.
The Snowball Effect of Small Purchases
Using hypothetical scenarios, Orman outlines how small credit card purchases can snowball into significant debt. For instance, charging $1,000 for holiday gifts on a credit card with a 28% interest rate can take over nine years to pay off if only minimum payments are made. The total cost? Nearly $3,000 when factoring in interest.
The Alarming Reality of Credit Card Debt
According to Orman, the average American carries $6,329 in credit card debt, with an average interest rate of 23.37%. At these rates, paying only the minimum due can take more than 21 years to clear the balance, costing thousands of dollars in interest.
The True Cost of Impulse Buying
Orman reflects on her experiences visiting homes during her time on The Oprah Winfrey Show, where she found closets filled with unused gifts that recipients didn’t like but felt guilty returning. “You wasted their money by taking this gift under the pretense that you loved it,” she told those who kept the gifts.
Real Generosity Means Financial Responsibility
To Orman, real generosity means giving in a way that doesn’t jeopardize your financial health. She advises only buying gifts with cash—and only if you have no existing credit card debt, a fully funded emergency fund, and adequate retirement savings. If those conditions aren’t met, Orman suggests finding creative, cost-free ways to show love and appreciation.
Honesty is the Best Policy
Orman’s message is clear: buying gifts with credit cards, especially when you’re already in debt, is a form of self-sabotage. She encourages listeners to think beyond the fleeting joy of holiday giving and focus on the long-term impact on their financial future. By being honest about your financial limitations, you can inspire mutual understanding and strengthen relationships.
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