As we sit in the midst of the chaos and joy of the holidays and search for last-minute gifts before gathering with our families, financial expert Suze Orman is strongly warning about the dangers of buying gifts with credit cards. In a recent episode of her Women & Money podcast, Orman cautioned listeners against letting financial guilt or societal pressure get them into debt during the season of giving.
Orman discusses how many people carefully manage their finances throughout the year, only to undo that progress in December. She calls the last ten days before Christmas “G-Day” or “Gift Day,” when financial guilt and holiday feelings often lead to impulsive spending.
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“You just went in there to spend maybe $50… and before you know it, you typically walk out with about $600 or $700 worth of stuff anyway,” Orman explains. She adds that people think they are saving with the discounts retailers are offering around this time, but in reality most people are spending much more and even going into debt.
Using hypothetical scenarios, Orman outlines how small credit card purchases can turn into significant debt. For example, charging $1,000 for holiday gifts on a credit card with a 28% interest rate could take more than nine years to pay off if only minimum payments are made. The total costs? Almost $3,000 if you include interest.
According to Orman, the average American has $6,329 in credit card debt, with an average interest rate of 23.37%. At these rates, it can take more than 21 years to pay just the minimum amount due, costing thousands of dollars in interest.
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“You’re not being generous to yourself,” Orman said of those left with credit card debt after the holidays. “You are sabotaging your future financially.”
A MarketWatch survey shows that 67% of Americans use credit cards for holiday gifts. About 12% of respondents said they are still paying off their grocery balance from last year.
Orman also reflects on her experiences visiting homes during her time on The Oprah Winfrey Show. She often found closets full of unused gifts that the recipients didn’t like but felt guilty about returning. “You wasted their money by accepting this gift under the pretense that you loved it,” she told those who kept the gifts. Even well-intentioned purchases can carry emotional and financial burdens if they are not truly needed or appreciated.
