It’s pretty normal to see people gearing up for some major spending around this time of year. In years past, that has translated in to some pretty heft credit card bills in January. But at least a few people are working on having a credit-card free Christmas.

Rising Interest Rates

Many credit card companies have higher interest rates than they did this time last year. While the possibility of using a credit card remains an option, it’s getting a lot more expensive. Even if you only wait until February to pay off the balance, you could be paying your credit card company quite a bit for the pleasure. Even the rewards that many cards offer don’t equal the cost unless you can pay off your balance in the month that you do your spending.

Tightening Belts

Even if your credit card’s terms haven’t changed recently, you may have noticed that a lot of people are tightening their belts for this year’s holidays. That doesn’t mean that we’re backing down on gift giving — most people will do everything they can to continue to give gifts even in an economic crunch. But there will be more handmade gifts this year, as well as careful shopping for sales.

A Holiday Without Cards?

There’s another card that will be making a reduced appearance this year: the gift card. Concerns about the stability of several major retailers makes a gift card a risky choice. Chances are increasing that recipients just won’t be able to use the full value of a gift card. The thought of using a credit card to purchase a gift card that won’t be used makes it an even more uncomfortable choice. If your goal is to help a friend or family member make a purchase, there is a far more stable option — cash.

Fewer Cards

According to eBillme (an online shopping option that allows users to pay cash), credit card use is dropping significantly this season:

Index results for the fourth quarter show that the credit crunch is causing shoppers to reduce their credit card usage and impacting consumer access to credit, resulting in a shift to cash alternatives.

It’s not necessarily a bad thing that we’re using our credit cards less, though. The average American household with at least one credit card has nearly $10,000 in credit card debt. The first step for any of us looking to reduce that debt is to put the credit cards away. It’s virtually impossible to pay off credit card debt when a person is still routinely using his or her credit cards for purchases — especially for a holiday gift shopping spree.

There are plenty of options for giving gifts that cost surprisingly little: we can give the gift of time or craft a gift for our loved ones. And if we do so, we get a gift of our own: the chance to avoid taking on credit card debt for the sake of the holidays.

Are you going to have a credit-card free holiday season?

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