A survey by CPA Canada shows holiday spending is rising, and younger Canadians are increasingly relying on credit to cover costs. This article explores why Gen Z and younger millennials are accumulating holiday debt and offers practical strategies to keep festive spending under control.
Gift-giving spending trends
The holiday season often brings extra expenses beyond gifts—travel, entertaining, special meals and charitable giving all add up. Despite higher prices across many categories, gift spending remains a priority for Canadians of all ages. In fact, average spending on gifts is up about 10% from last year, reaching roughly $661 for 2025.
How people pay and plan for those gifts varies by generation. Older Canadians tend to rely on savings or regular income and maintain consistent budgets: roughly 70% of people aged 55 and over expect to spend about the same on gifts as last year and plan to cover costs without borrowing.
By contrast, many younger adults are turning to credit. Among respondents aged 18 to 34, 58% expect to rely on credit cards to finance holiday gifts, and about 40% of that group plan to spend more on gifts than they did last year. These patterns highlight a gap between spending intentions and financial preparedness.
Li Zhang, CPA Canada’s financial literacy leader, suggests a clear reason for the difference: older adults generally have more practice managing money. They are more likely to have established savings habits, spending limits and reliable budgets. “Holiday spending is a straightforward example of budgeting in practice—spending only what your available funds allow,” Zhang says.
Young Canadians face similar social and emotional pressures to make holidays memorable but often lack the experience or habits that help control spending. That pressure can lead many to view credit as a quick solution. It’s no surprise that more than half of young respondents report feeling increased stress about holiday costs.
How a $661 purchase can turn into a $750 bill
Paying in cash completes a purchase at the point of sale, but using credit can convert a one-time expense into months of interest charges. If you do not pay your card balance in full within the grace period (typically 21 to 30 days after the billing cycle ends), interest begins to accrue. Credit cards make overspending easier, and if you can’t clear the balance, the finance charges add up fast.
Average credit card interest rates in Canada for standard cards range from about 20% up to the mid-20s. To illustrate the impact: a $661 charge left unpaid and collecting 19.99% interest for six months could grow to roughly $730. On a card charging 25.99% interest, the same purchase might swell to around $750—nearly $90 more than the original price.
Buy-now-pay-later (BNPL) plans can seem attractive because some offer no interest initially, but they function as short-term credit and deserve the same caution as credit cards. BNPL breaks purchases into fixed payments, which can encourage overspending, and missed payments can trigger fees or hurt your credit score.
Budgeting for the holidays
The most effective way to avoid a painful post-holiday credit bill is to plan and stick to a realistic budget. Below are practical steps to help you celebrate without creating long-term financial stress.
- Set a clear budget before you shop. Decide what you can realistically afford to spend across gifts, travel and festivities, then commit to that amount. If you want to save for next year, open a designated savings account and add small, regular deposits through the year. Shopping with cash or a debit card for non-essential extras can reduce impulse purchases.
- Prioritize and trim your gift list. If funds are limited, focus on the people for whom gifts matter most. Consider giving fewer but more meaningful presents, pooling resources for a group gift, or setting a spending cap per recipient to keep totals manageable.
- Consider secondhand and DIY options. Thrift stores and local resale markets often yield unique, affordable items. Handmade or personalized gifts can be more memorable and less costly than brand-new items.
- Use credit responsibly. If you must use a credit card, plan to pay the full balance as soon as possible to avoid interest. If that’s not feasible, prioritize payments on high-interest balances and avoid adding new debts.
- Communicate expectations. Talk with family and friends about budget-friendly alternatives—Secret Santa exchanges, experience-based gifts like shared outings, or agreeing to skip gifts altogether can all reduce financial pressure while preserving holiday connection.
Budgeting and mindful choices don’t make the season less joyful; they help ensure the holidays don’t cause financial strain in the months that follow. Plan ahead, prioritize what matters, and be creative with thoughtful, affordable gifting.
Further reading about saving
- 5 money moves to consider before the end of the year
- How much families really spend on extracurricular activities—and whether it’s affordable
- Top savings and investment account options for 2025
- Practical money-saving tips and tricks for living on your own