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Cue the holiday festivities — and expenses.
A new NerdWallet survey finds that American holiday shoppers plan to spend an average of $1,107 on presents this year. And some are still paying off last year’s gift spending. According to the survey, 31% of 2024 holiday shoppers who used credit cards still haven’t paid off those balances.
Whether you’re going into the holidays with debt or not, you may be wondering how to possibly pay for the “most wonderful time of year.” After all, you might also be spending on holiday travel, in addition to gifts. These seasonal costs come at a time when grocery prices are climbing and tariffs threaten to make other everyday goods even pricier.
Christmas loans (also called holidays loans) are one way to help cover these costs, but there may be cheaper options.
Learn about Christmas loans and compare alternatives before you borrow.
What is a Christmas loan?
A Christmas loan, or holiday loan, refers to any type of unsecured personal loan you use to help cover holiday costs. These expenses could include gifts, trips and even parties.
Unsecured loans range from $1,000 to $100,000 and have annual percentage rates from about 7% to 36%. They can get you cash quickly, too. Some lenders can approve and fund a loan the same day you apply.
But if you take out a loan, you could still be paying for this season’s expenses when the holidays roll around next year — and possibly the year after.
If you decide that a Christmas loan is the best fit for you, consider these options.
Loans from online lenders
Online lenders can fund a loan within a day or two after you apply, and they offer repayments terms from two to seven years.
Online lenders offer Christmas loans to consumers with all types of credit scores. They’ll consider your score, credit history, debt-to-income ratio and cash flow to determine your interest rate.
Personal loan rates from online lenders can start around 8%, but you need good to excellent credit (a score of 690 or higher) to qualify for the lowest rates.
Borrowers with fair or bad credit (scores below 690) can expect rates at the higher end of an online lender’s range, around 36%. That means you'll pay more in interest.
For example, say you have a $1,000 loan, due in two years.
- An APR of 20.99% will cost $233 in interest.
- An APR of 35.99% will cost $417 in interest.
If you're considering an online personal loan, pre-qualify with multiple lenders to find the best rate. And make a plan to pay off your loan as soon as possible.
Loans from banks
A personal loan from a bank can be a good idea if you have good or excellent credit and are an existing account holder. Bank loans can have attractive rates and perks for existing customers, and most offer online applications.
Not all banks offer personal loans, though, and some may only lend to existing customers.
» MORE: Best bank loans
Loans from credit unions
Credit union loans typically offer flexible terms, smaller loan amounts and lower average rates. Borrowers with fair or bad credit may find attractive rates compared with other lenders, as credit unions may consider factors beyond credit scores.
Note that only credit union members can apply for personal loans. To become a member, you must meet the requirements and possibly open an account at the credit union with a small deposit (often as low as $5). This is usually a quick process you can complete online.
» COMPARE: Top credit unions for personal loans
Personal loans from our partners
SoFi 
APR
8.74-35.49%
Loan Amount
$5K-$100K
LightStream 
APR
6.49-24.89%
Loan Amount
$5K-$100K
OneMain Financial 
APR
18.00-35.99%
Loan Amount
$1.5K-$20K
Upstart 
APR
6.70-35.99%
Loan Amount
$1K-$75K
Avant 
APR
9.95-35.99%
Loan Amount
$2K-$35K
Watch for Christmas loan scams
Many websites promising "Christmas loans" are actually offering payday loans in festive disguise. These lenders don’t check your credit, and your interest rate will be well into the triple digits.
Here’s an example of a typical payday loan: A $500 loan due in two weeks that costs $15 for every $100 borrowed — that’s an APR of 391%.
With this type of loan, you’ll have to pay back all the money, plus interest, in a few weeks or months. You may even have to let the lender access your bank account to collect payments, which leaves you vulnerable to overdrafts.
Avoid Christmas payday loans and stick to loans with a max APR of 36%. If you’re concerned about your credit score, your best bet is to apply with an online lender that accepts borrowers with lower credit scores. These loans fund quickly — sometimes the same day you’re approved — and loan amounts start as low as $1,000.
» COMPARE: Online lenders that offer bad-credit loans
More ways to pay for the holidays
Here are other options to help cover expenses during the holidays.
Buy now, pay later
As you shop online or in stores this holiday season, you may see the option to “buy now, pay later.” BNPL payment plans vary, but most offer “pay-in-four” plans that divide your purchase into four equal installments. The installments are two weeks apart, with the first payment due at checkout.
These “pay-in-four” plans very rarely charge interest. But many providers do charge fees, including late fees.
Some BNPL providers also offer monthly payment plans with rates ranging from 0% to 36% and repayment periods from three months to five years.
BNPL financing is convenient, especially when it's a simple checkout option at online stores. But it can easily lead to overspending, so keep an eye on your budget.
» COMPARE: Best buy now, pay later apps
0% APR credit cards
If you have good or excellent credit, you may qualify for a 0% APR credit card. You won’t be charged interest if you pay the balance within the card’s introductory period, typically 15 to 21 months.
A 0% credit card can be cheaper in the short term, but if you carry a balance after the promotional period, you'll pay interest on the amount going forward. If you miss a payment or pay late during the introductory period, the credit card issuer can cancel your 0% rate and charge the ongoing rate on the balance.
» COMPARE: Best 0% APR credit cards
Cash advance apps
Loan apps offer cash advances from your paycheck with no mandatory fees or interest. Most apps request an optional tip and charge fees for fast funding.
The amounts available from loan apps can be from about $10 to $750. The apps will automatically withdraw repayment from your bank account on your next payday. Typical funding time is one to five days, though some apps will deposit funds immediately for a fee.
Between fees and the optional tip, borrowing even $100 can equate to an APR of over 300% on an advance, so it's best to consider cheaper options if possible.
» COMPARE: Best cash advance apps
Compare holiday financing options
| Option | Cost | Repayment term | Pros and cons |
|---|---|---|---|
| 7% to 36% APR. | Typically 2 to 7 years. |
| |
| 0% to 36% APR. | Varies from 6 weeks to 5 years. |
| |
| 0% APR introductory period; 16% to 30% regular APR. | 15- to 21-month promotional period to avoid interest. |
| |
| Potential fees for fast funding and tips vary. | Next payday. |
|
Methodology
How we chose the best personal loans
Our team of consumer lending experts follow an objective and robust methodology to rate lenders and pick the best.
30+
Lenders reviewed
We review over 35 lenders, including major banks, top credit unions, leading digital platforms, and high interest installment lenders operating across multiple states.
25+
Categories assessed
Each lender is evaluated across five weighted categories and 27 subcategories, covering affordability, eligibility, consumer experience, flexibility, and application process.
60+
Data points analyzed
Our team tracks and reassesses hundreds of data points annually, including APR ranges, fees, credit requirements, and borrower tools, ensuring up to date, accurate comparisons.
Star rating categories
We evaluate more categories than competitors and carefully weigh how each factor impacts your experience.
NerdWallet’s review process evaluates and rates personal loan products from more than 30 financial technology companies and financial institutions. We collect over 60 data points and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.
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