Quick answer
A holiday loan is a small personal loan used for gifts, travel or seasonal bills. It spreads the cost out, but you pay interest on things you will use for a few weeks. If you borrow, keep it small and pay it off within a year. A budget, a 0% offer you can clear in time, or an earlier start on saving usually costs less.
Holiday spending is easy to underestimate and hard to undo. If you are thinking about borrowing, start with what it costs.
What a holiday loan costs
Here is what borrowing $1,500 over 12 months costs at three APRs across the 5.99% to 35.99% range offered on our network.
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 5.99% | $129.09 | about $49 | about $1,549 |
| 15.99% | $136.09 | about $133 | about $1,633 |
| 35.99% | $150.69 | about $308 | about $1,808 |
The interest on a short, small loan is modest at low APRs, but at the high end it adds a real chunk to your gift budget.
Cheaper ways to handle the holidays
- Set a total budget and a per-person limit before you shop.
- Pay cash for what you can and cut the list for the rest.
- Use a 0% intro offer only if you can clear it before the promo ends.
- Buy now, pay later can be interest-free if you pay on time. Read buy now, pay later first.
- Start a holiday savings fund in January. Small automatic transfers add up.
If you borrow
- Borrow the smallest amount that works.
- Pick a term of 12 months or less.
- Do not take a new holiday loan while last year's is still unpaid.
For travel, see vacation loans. For small amounts, see $1,000 loans.
If a fixed-rate installment loan is the right tool, use the form on this page to see whether partner lenders may have an offer, or call (800) 236-7761. You can also compare costs first with the loan payment calculator.
Examples are illustrations, not offers. Approval, APR and terms depend on the lender, your state and your credit profile.
Frequently asked questions about holiday loans: costs, risks and better options
Is a holiday loan a good idea?
Usually only for a small amount you can repay well before next year's holidays. Interest makes every gift cost more.
Are buy now, pay later plans better for holiday shopping?
They can be interest-free if every payment is on time. The CFPB notes BNPL loans can carry fees such as late fees, and several plans at once are easy to lose track of.
What about holiday or seasonal advances from tax preparers or apps?
Read the fees and terms carefully. Compare the total cost with a small loan or simply spending less.
Sources
- CFPB: What is the difference between a loan interest rate and the APR? (accessed 2026-10-09)
- CFPB: What is a Buy Now, Pay Later (BNPL) loan? (accessed 2026-10-09)
- CFPB: Do Buy Now, Pay Later (BNPL) loans have fees? (accessed 2026-10-09)
Last updated 2026-10-09. How we research and update pages.