Holiday spending is rising—and younger Canadians are leaning on credit

A survey by CPA Canada shows holiday spending is on the rise, and younger Canadians are using credit to keep up. Dig into the reasons why Gen Z and millennials are racking up the debt, and learn strategies to keep your expenses under control. 

Gift-giving spending trends

The holidays can be expensive. In addition to gifts, people spend on travel, food and drinks, special events, and yearly charitable donations. Still, gift-giving remains a priority for Canadians of all ages. Even with rising costs, gift spending is up 10% from last year, averaging $661 in 2025.  

While Canadians share a desire to give holiday gifts, there are clear differences in how generations handle their budgets.

About 70% of people aged 55 and over plan to spend about the same on gifts as last year, using their regular income and savings. But the story is different for Gen Z and younger millennials. Of those between 18 and 34 years old, 58% expect to rely on their credit cards for gifts. Worryingly, 40% of these respondents have a higher gift budget than last year.

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Li Zhang, CPA Canada’s financial literacy leader, has some ideas about why this might be. Older adults simply have more practice managing their finances. They may be better at establishing solid savings habits, spending boundaries, and budgets. Holiday spending, Zhang points out, “is a strong example of budgeting in practice—spending based on available funds.” 

Gen Z and younger millennials feel the same spending pressure but lack the financial experience of older adults. “Younger Canadians may feel social or emotional expectations to make the holidays memorable—adding pressure which can lead to using credit as a quick fix,” says Zhang.

It’s no surprise that 56% of young respondents said they feel more stressed about holiday spending. 

How a $661 purchase can turn into a $750 bill

When you pay with cash, the transaction is complete at the till. But with a credit card, you can easily end up paying interest—and a lot of it. Interest begins to accrue on a credit card if you fail to pay off the full amount of your bill within the grace period. This is the time between the end of your monthly billing cycle and your due, usually between 21 and 30 days. The problem is, credit cards make it easier to overspend, leaving you without the funds to pay off the balance in full. 

The interest rate on an average credit card in Canada (not including specialty low-interest products) is between 19.99% and a whopping 25.99%. To put that into perspective, a charge of $661 collecting 19.99% interest for six months would grow to a balance of around $730. On a card with a 25.99% interest rate, the total would be around $750, or nearly $90 more than the purchase price. 

Buy-now-pay-later (BNPL) offers may look appealing because they often have no interest or fees, but they should be used carefully. BNPL is a short-term loan that lets you split a purchase into small, fixed payments. But like credit cards, it can make overspending easy, and missing payments may lead to fees or affect your credit.  

Budgeting for the holidays

The best way to avoid a costly holiday hangover is to stick to a realistic budget. If you want to celebrate the holidays within your means, here are some practical tips to make sure you don’t overspend. 

• Budget beforehand. Budgeting isn’t exactly festive but it does help you make sound financial decisions. Figure out what you can realistically afford to spend—and stick to it. If you’re a holiday elf who loves to shop, consider opening a savings account to save up for next year. Pro tip: Shop with cash to avoid snap justifications for small extras. 
• Trim your list. If your income and savings don’t allow for something for everyone, limit who you shop for. For example, you might choose to just buy presents for kids this year. Group gifts can be affordable and meaningful. Rather than a small gift for every coworker, for example, consider a potted plant for the office.
• Shop secondhand. Thrift stores can be a treasure trove, and they often support local services like the hospital auxiliary or a shelter. As an alternative, consider online marketplaces.
  

Sticking to a budget doesn’t make you a Grinch, and it will mean a happier new year. Plan your holiday budget beforehand, prioritize spending, and get creative with your giving.

Read more about saving:

• 5 money moves to make before the end of the year
• How much are Canadian families (really) spending on extracurricular activities—and can they afford it?
• The best savings and investment accounts in Canada for 2025
• The money-saving tips and tricks I’ve learned while living single

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