Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Dec 2, 2011

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Consumers are gearing up for the holiday season. They are not only looking forward to time with friends and family, holiday meals, and vacation time, but they’re also excited to give presents to their loved ones. As a result of the gift-giving cheer Christmas and other holidays bring, the month of December, for many, proves to be very expensive.


According to the American Research Group, shoppers spent nearly $650 on Christmas gifts in 2010. Unless consumers have been setting savings aside for the holiday season purchases, they may find themselves short of cash.


Luckily, there are a few paths to take in order to circumvent any lack of cash-on-hand.


Credit cards are always a quick and accessible option. Charging gifts on credit allows consumers to “buy now, and pay later,” which is an excellent option for those without adequate savings to get through the holiday season. However, this also creates a potential pitfall, in which borrowers may subject themselves to compounding interest rates if those cards aren’t paid off in a timely manner.


If a shopper would rather fixed interest rates and payments, or doesn’t have a credit card, they may want to consider a personal loan.


A Safe and Fixed Payment Plan


Small personal loans can be taken out by any with decent credit, and can help arm shoppers with cash-on-hand for their holiday shopping expeditions.


Personal loans are good for those without any collateral, as they can be issued to borrowers in a completely unsecured manner. Granted, unsecured personal loans tend to come with higher interest rates, but they can still prove to be better options than credit cards if a borrower doesn’t believe they will pay a credit card off before the amount compounds.


That is because personal loans are loans with fixed payments and fixed interest rates. Your monthly payments remain constant, and the loans will amortize by the time the agreed-upon term has been fulfilled.


For those insisting on receiving lower interest rates, consider a secured personal loan. Secured personal loans are guaranteed by collateral or a co-signer, resulting in reduced risk for the lender and a reduced interest rate for the borrower.


Shop Responsibly


Once qualified for a personal loan, shop away. Borrowers need only to remember to shop within their means. It’s never a good idea to carry long-lasting debt over material purchases that are not an absolute necessity… despite all the smiles that would be made as a result.


Be realistic about what you can afford and how long you want to be making payments that spawn from holiday expenditures. It’s not necessary to over extend your personal finances or condemn yourself to six months of repaying a personal loan (and definitely not on a compounding credit card bill) all as a result of the holidays.


Rather, remember what the season is about. Enjoy this time of the year, spend some time with friends and family, and let the gifts just be something on the side.