Before Christmas, the smartest “deal” is often skipping the card swipe.
As we approach Christmas, we start to think about what we will need to buy in the run up to the festive season.
It’s tempting to “put it on the card” before the holidays. But even a small, persistent balance can quietly cost far more than you think—especially compared with simply investing that same money.
To illustrate the dangers of debt, below I run a simple, apples-to-apples comparison over the last 10 years using your figures:
- Credit-card balance: a constant €500 carried for 10 years at 17.04% p.a. (current Czech credit card average).
- Investment alternative: a one-off €500 invested in the MSCI World Index (Net, EUR) for 10 years.
For the index, I use MSCI’s latest factsheet, which shows a 10-year annualised return of 11.85% (EUR, net) to 30 Sep 2025.
What a “constant €500” on your card really costs
If you keep your balance fixed at €500 by paying only the interest each month (so the balance never goes away):
- Interest per year: €500 × 17.04% = €85.20
- Interest over 10 years: €852 (and you still owe the €500 principal at the end)
That’s the price of carrying a “small” balance—€852 that bought you nothing new.
What €500 could have become if you’d invested it instead
Using MSCI World’s 10-year EUR net annualised return of 11.85%:
- Future value = €500 × (1 + 0.1185)¹⁰ = €1,532
That’s a gain of roughly €1,032 on top of your original €500 over the decade (dividends reinvested, net of withholding per MSCI’s “Net” series).
Side-by-side over 10 years
- Carry the debt: You pay €852 in interest and still owe €500.
- Invest the €500: You end with €1,532.
So you end up €2,884 better off by investing.
“Holiday debt snowballs quietly but invested money snowballs for you.”
Why this matters before Christmas
- Impulse financing is expensive. At 17% pa, even a stable, small balance is a long-term drain.
- Time is the secret ingredient. A decade of compounding at equity-like returns turns even €500 into something meaningful.
- January regret is real. The “buy now, deal with it later” feeling fades; the interest bill does not. The dangers of debt become real.
What should you do at Christmas?
- Set a hard cap: List gifts you can fund from cash, not credit.
- Delay a week: Most “must-have” purchases don’t pass a 7-day wait test.
- If you do carry a balance, clear it fast: Every month at 17% pa matters.
- Automate investing: Even a small, regular amount into a broad global index fund/ETF keeps your future self in the black.
Summary
Before Christmas, the smartest “deal” is often skipping the card swipe. Over a decade, that choice can be worth thousands of euros to your future self.
