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5 easy ways to stretch your holiday budget

A high-yield savings account can help stretch your holiday budget thanks to an elevated APY. Getty Images

The holidays are upon us, which means it's time to spend time and share gifts with loved ones. Unfortunately, this could be a tough holiday season for many households due to price increases from inflation. Along those lines, a recent TD Bank survey says that 68% of consumers are concerned about the inflation's impact on their holiday shopping. Still, 96% of the survey respondents expect to overspend on gifts this year.

While there's not much you can do about high prices, you can employ savvy strategies to stretch your holiday budget this year. In fact, there are multiple ways to get more control over your holiday budget and more bang for your buck.

Start by exploring your high-yield savings account options here and earn more interest on your money.

5 easy ways to stretch your holiday budget

Here are five simple strategies to help you stretch your budget this holiday season.

Take advantage of lucrative interest returns

If you haven't done so already, consider opening a dedicated deposit account for your holiday spending. It may be too late to benefit this year, but by planning ahead you could grow your money significantly before the next holiday season.

If your savings are currently languishing in a traditional savings account, understand these accounts are earning a measly 0.46% on average, according to the Federal Deposit Insurance Corporation (FDIC). By contrast, you could earn up to 5% or higher by moving your money into a high-interest savings account (HYSA) or certificate of deposit (CD).

High-interest savings accounts are usually offered by credit unions and online banks and give you the chance to grow your money much faster than a traditional savings account. Likewise, CDs also earn substantially higher yields than regular savings accounts in return for keeping your money in your account for a specific term, which can range from three months to five years. According to the FDIC, a 12-month CD currently averages a 5.44% yield, which could help you grow your money just in time for the next holiday season.

Start earning more with a CD here now.

Snag a hefty bank bonus

Many banks offer bonuses for opening a new checking or savings account and meeting specific qualifications. These banks aim to incentivize you to open an account by offering bonuses ranging from a few hundred dollars or more. To receive the bonus, you'll likely need to meet specific requirements. For example, you may have to set up a direct deposit from your employer or make a predetermined number of purchases with the account's debit card.

Securing a bank bonus during the holiday season could help you cover some of your holiday expenses and help you avoid using your savings or credit cards to pay for holiday gifts.

Start shopping early

Getting an early start can stretch out your shopping timeline so you're not forced to spend a lot at once to finish your shopping before the holiday. Early shopping can also help you save on shipping costs, as you can avoid paying for expediting shipping costs. 

Avoid using your credit cards

Unless you pay your credit card in full each month, you'll pay high interest on any purchase you charge to your card and significantly increase what you spend on holiday gifts. According to the most recent data from the Federal Reserve, credit card interest rates average 22.77% and many cards charge upwards of 30%. If you only make the minimum payment on your cards, these charges can remain indefinitely on your account.

"It can be easy to overspend during the holiday season, and a credit card is the easiest way to do that," says Judith Liotta Leahy, CIMA and senior wealth advisor at Citi Personal Wealth Management. "Charging your expenses is a common way people lose track of their spending. It is important to review the true costs of your purchases and make sure they fall within your budget before ringing up at the cash register."

Use cash back websites and apps

Another way to stretch your dollar and save on gifts is to use saving-centric websites and apps. 

Similarly, it's always wise to shop and compare to find the best price before making a purchase. Google Shopping and PriceGrabber are two sites that aggregate prices from different retailers to save you time clicking from site to site to find the best deal.

The bottom line

The tactics mentioned above can help you stretch your holiday budget and save money. It's also crucial to follow a budget and set spending boundaries. For example, you may determine you have $800 to spend this season. If there are 20 people on your shopping list, that means you could set a $40 limit for each gift. While gifts help us show loved ones our appreciation for them, they shouldn't cause you to go into debt or face negative financial consequences. With smart planning, you can give meaningful gifts to those you care about without compromising your finances.

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