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Nearly Half of Americans Rack Up Holiday Credit Card Debt. Here's How to Avoid That Fate.

Maurie Backman, The Motley Fool

The holidays are a time to celebrate, reconnect with loved ones -- and, apparently, overspend. An estimated 48% of Americans go into credit card debt during or immediately after the holidays to cover the expenses associated with them, according to a new study from Marcus by Goldman Sachs.

Among those who land in debt, 31% do so to cover holiday-related travel expenses, 20% do so because they spend too much to entertain, and 79% do so to buy gifts. And while these are all legitimate holiday expenses, taking on debt to pay for them is a good way to start off the new year financially on a sour note. If you're struggling to keep up this holiday season, here are a few ways to minimize your costs and avoid racking up what could ultimately be a painful credit card balance.

Couple looking at sheet of paper and covering mouths as if gasping

Image source: Getty Images.

1. Travel smartly

Waiting until the last minute to book your holiday travel often means getting stuck with overpriced fares. In fact, flights tend to peak about 10 days before Christmas Day, so if you've yet to make arrangements to visit family or friends, get moving now. You can also lower travel costs by flying at off-peak times, or by being flexible with departure and arrival dates. And don't ignore the savings by driving instead of flying, especially if you have travel companions to share the cost of fuel.

2. Entertain on a budget

It's nice to have people over to celebrate during the holidays, and you can do so without spending a fortune. For one thing, cook your own food rather than pay for catering. Restaurants typically charge a 300% markup, which means that an outsourced dinner for 10 costing $200 can most likely be prepared in your own kitchen for a mere $50. Next, consider skipping the alcohol, which only adds to your costs, and sticking to water and soft drinks. Finally, don't be shy about asking guests to pitch in. If you assign easy items like cake, fruit, salads, and appetizers to your party attendees, you'll cut costs while still being able to present a nice meal.

3. Stick to a shopping list

The problem with frequenting retail shops around the holidays is the temptation to buy nonessentials that look appealing or are supposedly on sale. But if you make a shopping list in advance and stick to it, you'll resist the urge to spend more than you can afford. An even better bet is to figure out the price of each item you're looking to purchase, bring just enough cash to cover your list, and leave your credit cards at home. This takes the option to splurge (whether on yourself or others) off the table.

The holidays can be a truly expensive time, but you can keep their associated costs more manageable. Remember: When you incur credit card debt, you're automatically paying more for things that otherwise could've cost less -- that's the way interest works. If you'd rather not throw your money away, stay out of debt at all costs. You'll be thankful you did when you can start the new year with a financially clean slate.

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