Best Christmas Loans of 2025

Having yourself a merry little Christmas is getting more and more expensive these days. Mariah Carey might be OK with only getting “you” for Christmas, but the rest of your friends and family are probably hoping for actual presents. Travel expenses, food and decoration costs, and admission to various holiday activities like light displays and stage shows all add to the overall holiday price tag.

If you’re struggling to afford the holidays, you might consider taking out a loan to cover your costs. Below, we’ll cover the best Christmas loans with the lowest fees and interest rates for this holiday season.

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Best lenders for Christmas loans

Best bad credit lenders

Getting a loan with bad credit can be tough if you don’t know where to look. The lenders below will consider your application if you have bad credit or if you can nudge your score into the fair credit range (580 - 670 FICO score).

What is a Christmas loan?

A Christmas loan is any type of financing that helps you cover the cost of the holidays, including gifts for loved ones, travel expenses, Christmas activities such as zoo lights or a holiday concert, and any costs associated with hosting for the holidays, such as meals and decor.

In other words, Christmas loans aren’t one specific type of loan, but rather a loan taken out for a specific purpose: making your days merry and bright (with interest). That means you’ll borrow a lump sum of money, minus any fees, and then pay it back over a predetermined period of time.

Types of Christmas loans

Personal loans are a common type of Christmas loan since you can use personal loans for almost anything, but there are other types of holiday financing — from 0% APR credit cards to buy now, pay later (BNPL) programs — that can also help when holiday budgets are tight and inflation soars higher than Rudolph.

Personal loans

Personal loans are a great way to cover holiday expenses, especially since rates are lower, on average, than credit card APRs. Personal loan requirements vary by lender, but it’s possible for borrowers with fair or even poor credit to qualify. Many lenders even provide same-day funding, so you can apply and have cash in your bank account the same day — then go last-minute Christmas shopping that evening.

Many personal loans range from $2,000 to $50,000, more than enough to cover Christmas (and then some). And personal loan interest rates typically range from 6.49% to 35.99%. A few lenders may let you borrow as little as $1,000 if you only need help with a few gifts or a plane ticket.

Repayment terms vary, but you’ll often have between two and seven years to pay back what you borrow. Some Christmas loans may have upfront origination fees, which could be taken out of the loan amount and reduce what you receive.

0% APR credit cards

Paying for Christmas with a credit card can be expensive because of the high interest rates. However, if you qualify for a credit card with an introductory 0% APR, you could avoid interest costs for the duration of the introductory period.

Just keep in mind: After the introductory period, the card’s standard rate will kick in. The best way to use a 0% APR credit card for holiday spending is to pay it off in full before the interest-free period is over. Don’t be tempted to overspend with it, even if you’re given a high credit limit.

‘Buy now, pay later’ Christmas gifts

Whether you’re doing your Christmas shopping at the mall, in a big-box store, or online, you’ll probably see a short-term loan payment option called buy now, pay later (BNPL). These services let you split the cost of your purchase into installment payments — typically over the course of four to six weeks or for a number of months. 

BNPL has become an increasingly popular way to finance purchases throughout the year, according to the Consumer Financial Protection Bureau (CFPB). That tracks with ConsumerAffairs’ findings ahead of this holiday season; 15% of surveyed consumers said they plan to use BNPL for Christmas purchases.

But BNPL isn’t always a good choice. “BNPL is marketed as harmless (‘four easy payments!’), but it’s still debt. It just feels safer because you’re not swiping a credit card,” says Michelle Taylor, financial advisor at Gambin Financial Group and founder of Women in Wealth. “While some interest-free BNPL options can be fine for one purchase that fits within your budget, BNPL becomes dangerous when you stack multiple plans across different retailers and suddenly find you’re managing six micro-loans.”

According to Taylor, “Credit cards are actually safer because they are easier to track in one place, have stronger consumer protection in case of a dispute, and you can earn points or cash back with loyalty cards.”

Tax refund holiday loans

Major tax preparation companies such as TurboTax and H&R Block may offer tax refund advance loans, often available at the start of tax season, or even earlier, to help families pay for Christmas. They’re based on your anticipated tax refund. Last year, for example, Jackson Hewitt offered its early tax refund advances starting Dec. 16.

However, the Center for Responsible Lending warns that these tax refund loans can have high fees and interest rates, especially if offered by non-bank financial firms such as payday loan lenders. Plus, you’ll be on the hook for repaying what you borrowed, even if your refund ends up being less than anticipated.

“Use your refund for future goals, not past spending,” advises Taylor. “You can’t bet on a tax refund to save the day when you have no idea what the future holds and what else you may need it for in April.”

Christmas payday loans

A payday loan is a small, short-term loan, often $500 or less, that you pay back within a couple of weeks, usually by your next paycheck. Because there's no credit check, payday loans are easy to qualify for and might sound like a quick solution to expensive holiday shopping.

But fair warning: Payday loans can be highly predatory. High fees, small loan amounts, and short repayment terms often translate to APRs north of 400%. And because you use your next paycheck to repay the loan, you might come up short on cash soon after — necessitating another payday loan to stay caught up on expenses.

Payday alternative loans

In response to the high risk and predatory nature of payday loans, some federal credit unions offer payday alternative loans (PALs) to members. These loans are relatively small (capped at either $1,000 or $2,000) and short-term (limited to six or 12 months). But interest rates can’t exceed 28% APR, making them less expensive than other options.

However, you must be (or become) a member of a credit union offering payday alternative loans to qualify. 

Pros and cons of Christmas loans

Christmas loans have some obvious advantages, but consider the drawbacks when taking on any kind of debt.

Pros

• Money for gifts and other expenses: This is the number one reason to take out a Christmas loan, especially if you have kids. As a parent, giving your kids exactly what they've asked for can be the best feeling in the world. Shop smart with this money (like hitting up Black Friday deals) to make the most out of a small loan amount.
• Avoid uncomfortable conversations: Telling friends and family you want to skip gift exchanges, potluck dinners, and seasonal activities because you’re short on funds can be uncomfortable. A Christmas loan lets you avoid this scenario and take part in seasonal experiences with those you love most.
• Potential to improve credit score with on-time payments: Some Christmas loans, including personal loans, credit cards, payday alternative loans, and now even some BNPL loans, get reported to the credit bureaus. As long as you make on-time payments, you can expect your score to increase over time.
• Relatively small loans: Christmas loans are generally much smaller than other loans, such as car loans, mortgages, and even personal loans for home renovations or moving costs. In the grand scheme of things, small loans may not have as big an impact on your finances — but you should still be cautious when borrowing any amount of money.

Cons

• Potential for upfront and late fees: Some loans may have upfront fees (origination fees), and you’ll generally have to pay a late fee if you fall behind on payments.
• Potentially high interest rate: Interest rates for loans vary, but personal loans and BNPL loans can go as high as 36%, and payday loans have APR equivalents in the triple digits. Interest charges and fees can make the holidays even more expensive.
• Less flexibility in monthly budget: Whether you take on a payday alternative loan for six months or a personal loan for six years, you’ll have less wiggle room in your monthly budget during that time. This can make it harder to save up for next Christmas and harder to qualify for future loans.
• Potential to lower credit score through missed payments and high credit utilization: While Christmas loans can help you boost your credit score when managed responsibly, they can also have the reverse effect. Missing a single payment can hurt your credit score. And if you’re financing the holidays with a credit card, you risk lowering your credit score due to a higher credit utilization.

Is a Christmas loan worth it?

Christmas loans may be worth it if you borrow a small amount and have a solid strategy to pay it back. While it’s up to you to determine whether a purchase is “worth it” or not, expenses like plane tickets to see family members you might not have seen in years or a sentimental gift to say thank you to a loved one who’s always taken good care of you may feel well worth the interest you’ll pay on the loan.

Worth it

Ask yourself these questions to determine if a Christmas loan is worth it:

• Will you get to see loved ones or show them much-deserved appreciation through a gift — and you wouldn’t be able to do it without the loan?
• Do you only need to borrow a small amount and have a plan for a quick repayment?
• Do you qualify for a 0% APR credit card offer, and will you be able to pay it off before the interest kicks in?
• Can you comfortably afford the monthly payments (with room to spare) for the duration of the repayment term?

Not worth it

Just bear in mind that Christmas loans aren’t always worth it. Don’t go into debt over the holidays if:

• You have other important bills to focus on
• You’re living paycheck to paycheck and are one emergency away from a real financial crisis
• You can work with your loved ones to determine cheap (or free) ways to celebrate the holidays instead.

“Don’t stress over expensive gifts for everyone every year,” advises Lukendric A. Washington, a certified financial planner and CEO of Manifest Wealth Management. “It’s easy to succumb to societal pressures, but you have to protect your finances. If you get overleveraged because of Christmas, it’s too easy for other factors like car trouble, an unexpected bill, or sickness or time off work to derail your financial status.”

How to use a Christmas loan responsibly

If a Christmas loan is the right path forward, make a plan to manage it responsibly and stay on Santa’s nice list:

• Borrow only what you need: Don’t be tempted to borrow more than you need, even if you’re approved for more. You might even borrow a little less than you think you need and force yourself to do your Christmas shopping on a tight budget.
• Set up automatic payments: If possible, set up autopay to help prevent missed payments. Many of the best personal loan lenders offer rate discounts when you set up automatic payments.
• Make biweekly payments: Prioritize early repayment (few, if any, lenders charge repayment penalties). According to Taylor, “The best way to tackle this is to set up automatic payments biweekly, not monthly. You’ll make the equivalent of one extra payment a year without feeling it, and it reduces interest paid over time.”

How credit and income affect loan rates

Personal loans are one of the best types of Christmas loans. If you have decent credit and income, you can expect more manageable rates than payday loans or credit cards. Let’s break down how both your credit score and income can impact the personal loan rate you’re offered when you apply.

Personal loan interest rates by credit score

Other ways to fund Christmas expenses

Christmas loans feel like holiday magic when you can’t count on Santa, but they’re not the only way to cover holiday spending. Here are some other ways to pay for Christmas without taking out a loan.

Find ways to cut costs

Christmas doesn’t have to be expensive. Tell your loved ones you need to skip gift swaps this year, and look for free holiday activities, like parades and driving through neighborhoods with lots of lights — instead of paid activities, like seeing A Christmas Carol at your local theater. Suggest a potluck for Christmas, rather than taking on the burden of funding and cooking an entire holiday meal yourself.

Save year-round

It may be easy to budget for your rent or mortgage, because that bill comes due on the same day each month. But expenses that arrive once or twice a year can throw a wrench in your monthly budget. When you know irregular expenses are coming, set aside an amount each month to cover them once they arrive.

According to a ConsumerAffairs report, just under a third (32%) of Americans plan to spend between $1,000 and $3,000 on holiday gifts, travel, and decor. Instead of facing it all at once, you could set aside, say $100 to $200 per month to have a healthy Christmas fund to draw from (no interest attached).

“I typically say to budget for big events all year,” says Washington. “I encourage clients to set a travel and miscellaneous fund in a high-yield savings account that they continuously fund year-round. That way, when the event arrives, you don’t have to scramble for the full amount.”

Ask friends and family

Asking friends and family members, such as siblings, parents, and grandparents, if you can skip the gift exchange to cut back on costs may be easy. But it’s a lot harder to have that conversation with your kids under 18 who expect gifts on Christmas morning.

Consider asking loved ones if they would lend you money so you can purchase gifts for your children. You can also ask them to help pay for family events that you host. If a loved one says yes to a loan, make a clear plan to pay them back with a defined repayment schedule.

Related: Should You Borrow Money From a Family Member?

Methodology

Credible evaluated 32 lenders across 1,216 data points to find the best Christmas loans. We chose the best lenders based on the following weighted categories:

• Rates and fees: 18.75%
• Eligibility and options for bad and no credit: 17.5%
• Availability: 12.5%
• Loan amounts and terms: 10%
• Customer satisfaction: 10%
• Customer service: 10%
• Efficiency and fund delivery: 10%
• Discounts: 7.5%
• Credible proprietary data: 3.75%

Credible’s team of experts gathered information from each lender’s website and from our partners directly. We also considered each of our partner lenders’ statistics over a 12-month period — including average funding times, average credit scores for approved applicants, and average rates. Each data point is verified by a senior editor to make sure it’s accurate at the time of publication. 

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.