» Learning Center » Personal Loans » Holiday Loans: Here’s What You Need to Know

Holiday Loans: Here’s What You Need to Know

With the holidays around the corner, families are getting ready for the season of giving. Even in standard times, the holiday season can be hard on the budget.

According to the National Retail Federation, last year Americans spent more than $730 billion on holiday purchases. This year, despite the pandemic, spending is expected to increase by as much as 5.2%.

Pandemic or not, Americans are still looking for ways to celebrate. Holiday loans are one way to do that.

What is a holiday loan?

A holiday loan is a personal loan used for holiday-related expenses. Gifts for loved ones can strain a budget. A holiday loan can ease that strain. These loans can also be used to pay for other expenses, such as food, decorations, travel, or for taking care of any general expenses you might have.

You can also use a personal line of credit or credit cards as a type of holiday loan; however, interest rates on these are often higher than those of holiday loans.

How do holiday loans work?

Holiday loans work in the same way as personal loans. They’re issued by banks, credit unions, and online lenders. These loans are paid back in installments, meaning you make payments of a set amount for a set period of time.

Holiday loan amounts and interest fees will vary depending on the lender. Terms will also vary, but most holiday loans are short-term loans paid back within a year.

You can apply for a holiday loan from home. Fill out our simple application form to check your offers and rates. You could have the money in your bank account as soon as the next business day.

When should you get a holiday loan?

Holiday loans are for the holidays and should be used for special occasions. Many holiday loans aren’t offered all year and are accessible during the last few months of the year. For instance, many lenders don’t offer holiday loans until near Halloween and quit offering them before the new year.

Because many individuals do the greater part of their holiday spending in November and the beginning of December, you’ll want to investigate your holiday loan options now.

You might also want to consider a holiday loan if you’ve finished your holiday shopping but want to save on high-interest credit card debt. For this situation, you’d utilize a holiday to take care of your balances on higher interest rate credit cards. A holiday loan would allow you to have a single monthly fixed payment.

Who should get a holiday loan?

If you need a small amount of extra money to cover presents and holiday expenses, a holiday loan may work for you. Think about one if:

You have a good credit score. A good to excellent credit score will get you the best loan rates. If your credit isn’t so great, you may still qualify for a holiday loan, but your interest rate will be higher, meaning it’ll cost more, in the long run, to pay the loan back.

You can pay off the loan. Regardless of whether you don’t make it a habit of borrowing money, you still need to consider your capacity to repay the holiday loan. It would be best to look at how an extra regularly scheduled installment will find a way into your financial plan. If you don’t have the assets—or don’t figure you will—a holiday loan may not be a good option for you.

You want to consolidate your current debt. If you’ve just done your holiday shopping with credit cards and need to bring down your interest payments, a holiday loan can help. For this situation, look for a holiday loan with a lower financing cost than your current credit cards, utilize the loan to take care of those cards, and afterward pay off the holiday loan.

Holiday loan types

There are a few ways to borrow money for holiday expenses:

Personal loans

Personal loans are a type of unsecured loan that allows you to spend the money on almost anything. Holiday loans are personal loans used to pay for holiday-related expenses.

The benefits of personal loans include better terms than credit cards (typically), fixed APR and monthly payments, fast funding, and they can be used to pay for whatever expenses you need to pay.

The cons of personal loans include: interest in addition to holiday expenses, increased debt load, more extended repayment periods, potential fees, and some borrowers may not qualify, or if they do, the interest rate may be significant.

Credit Cards

Credit cards allow access to a rotating credit extension to cover everything from holiday gifts to food to travel. Credit cards allow you to spend until you reach specific credit limit and afterward make installments on your balance as you’re able. Often, credit cards have higher interest rates than different kinds of holiday loans, making them one of the more costly approaches to pay for your holiday festivities.

If paying off your balance on a credit card is something you can afford to do, credit cards are basically an interest-free loan. If you are not able to pay your balance before it’s due, depending on your interest rate, it’s possible you end up paying more than you would with a personal loan. On the off chance that you can’t get a holiday loan to cover the holiday expenses and already have credit cards, this may be your solitary alternative. However, it very well may be all the more costly one.

Personal Credit Line

A personal line of credit is like a credit card—it’s a rotating credit line where you can acquire up to a specific sum whenever and make installments by the due date. You additionally can utilize a personal credit line a similar way you’d use a holiday loan. In any case, rather than getting a particular amount sum and taking care of it in portions, you can take out what you need, as you need it—up to a specific sum, obviously. At that point, make installments on your balance owed while as yet having the alternative to obtain against your cutoff as extra costs heap up.

Factors to consider when shopping for holiday loans:

Loan fees. The interest rates of holiday loans are typically lower contrasted with different credit cards and personal lines of credit. All things considered, you should look at a wide range of alternatives before settling on your decision. Interest rates will vary.

Repayment terms. Many holiday loans have year reimbursement terms, letting you split up installments throughout the following year. While a few lenders may have longer reimbursement terms, this will affect your general sum due—the more you make installments, the more interest you’ll pay.

Additional fees. Consider if the lender charges origination fees or fees for prepayment. Moreover, is there a late fee? Would you be able to get a rebate if you pursue autopay? Regardless of whether a bank has fair interest rates, assess other material expenses to consider whether you’ll wind up paying more over the long haul.

Prequalification. Many lenders let forthcoming borrowers complete an initial application for a loan that determines whether they prequalify for a loan. This initial application allows lenders to assess a borrower’s requirements and general financial soundness dependent on a soft credit request. Thus, prequalification lets you look for the best loan rates without harming your credit score.

Advantages and disadvantages of holiday loans

Holiday loans aren’t ideal for everybody except, contingent upon your necessities; they might be helpful.


Borrow what you need. Because holiday loans usually are lower amount loans, you can get what you require and try not to pay interest on an advance more significant than what you need.

Lower loan costs. Holiday loan financing costs are ordinarily lower than those of credit cards or personal lines of credit.

Short terms. Most holiday loans have reimbursement terms that are a year. If your lender doesn’t charge prepayment fees, you can take care of your balance ahead of schedule without confronting additional expenses.


You’ll pay more than your real holiday expenses. Keep in mind that acquiring a loan to pay for your holiday expenses implies you’re paying for the costs in addition to interest.

You could hurt your credit. In the event that you make late payments, miss payments, or default on your loan, your credit score could take a hit, and this could make it harder to borrow in the future.

Alternatives to holiday loans

Rather than using a holiday loan, consider other options, such as:

Save early. Begin putting something aside for the holidays earlier. Putting a small amount aside every month into a savings account can help lighten the need to borrow money when the holiday season comes around.

Purchasing consistently. Instead of buying every one of your presents during one time, purchase presents all year or whenever you can find a good deal.

Sell what you can. You probably have unused items around the house. Consider selling them on Offerup or Facebook Marketplace to make money for holiday expenses.

Use your credit card points. One option is cashing in your credit card points for gift cards to use yourself or to gift to others. Many credit card companies allow you to redeem your points for gift cards to major retail stores.

Apply for a 0% APR credit card. If your credit score allows, consider applying for a credit card that offers 0% APR. This would allow you to pay for your seasonal expenses in monthly payments, usually with a year.

Decide to spend less. If you’re stressed about money, the answer may be to spend less. Speak up to friends and family, who are probably feeling the same stress, and agree to spend less. This might be uncomfortable initially but could lessen the holiday spending stress for you and your loved ones.

The bottom line

Before you hurry to take out a holiday loan, consider all of your options. If you decide to borrow a holiday loan, look for one with low-interest rates, low or no fees, and borrow only what you need and are confident you can pay back.

Notify of
Newest Most Voted
Inline Feedbacks
View all comments
1 year ago

I may need your help. I tried many ways but couldn’t solve it, but after reading your article, I think you have a way to help me. I’m looking forward for your reply. Thanks.

Can you be more specific about the content of your article? After reading it, I still have some doubts. Hope you can help me.

I want to see available options for Small Loans ($100-$1000) Installment Loans ($100-$5000)

I confirm that I am over 18 years old, I am not an active-duty military member, and I have verifiable income.


*Applying does not affect your FICO score.