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Risks of using a personal loan for Black Friday shopping in 2021

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The current global supply chain crisis may have an impact on the ability of some retailers to get Black Friday products, but most experts still expect Black Friday 2021 to be a major shopping event. In 2020, even with the COVID-19 pandemic looming large, shoppers spent over $9 billion in online sales on Black Friday.

While unemployment has recovered somewhat from the lows experienced during COVID-19, it’s still higher than pre-pandemic loans. This can make taking out a Black Friday loan for shopping tempting for some people. But the decision to borrow money is one that shouldn’t be taken lightly. Sure, you can apply for a Black Friday loan and get your hands on cash in a matter of days or even hours, but that doesn’t mean you necessarily should.

Before you take out a personal loan for Black Friday shopping, understand what the experts have to say and consider the alternatives.

What are Black Friday loans used for?

Black Friday loans are personal loans that consumers use to buy big-ticket items that typically go on sale or are in demand on Black Friday.

For the most part, loans are used for pricier Black Friday purchases consumers need to pay off over time, like new kitchen appliances. Some shoppers also take out Black Friday loans for furniture or electronics they don’t have the funds to pay for or to purchase the bulk of their holiday gifts.

What are the risks of taking out a loan for Black Friday shopping?

Taking out a Black Friday loan does come with risks.

Changes to your life may impact your ability to repay the loan

Generally speaking, you’re taking a big chance when you borrow money for any reason, says certified financial planner Jeff Rose, who writes at Good Financial Cents. Any money you borrow will have to be paid back with interest, and it’s not always easy to keep up with monthly payments if you have a loss in income, lose your job or face surprise expenses long after all the holiday gifts have been opened and put away.

You may not get the lowest interest rate

Interest rates on Black Friday loans can vary significantly. If you have a good credit score, you may be able to borrow for Black Friday with an APR as low as 2.49 percent. However, if your credit isn’t great, you could wind up paying up to 35.99 percent APR on those holiday gifts, which can wipe out those Black Friday savings in a hurry.

Loans may come with fees

Some personal loans require you to pay processing fees or an origination fee on top of interest, says financial debt resolution attorney Leslie H. Tayne of Tayne Law Group. “Make sure you take this into account when considering how much the loan is actually going to cost you and whether you can afford it, and request a breakdown of the loan details,” Tayne says.

It may impact your credit score

Opening any type of personal loan will produce a hard inquiry on your credit report, which can lower your credit score. There are scenarios where a personal loan can hurt your credit score, though it can also provide a positive impact. Make sure that you understand how opening a Black Friday loan can affect your credit score before you sign the loan paperwork.

When should you use a loan for Black Friday shopping?

Getting a loan to pay for Black Friday shopping could be a sign that you are living a lifestyle you can’t afford.

“If you have to borrow to hit the stores — on Black Friday or any other day — then you are spending beyond your means,” says Greg McBride, CFA, Bankrate chief financial analyst.

Take a look at your budget, see what you can afford to spend and operate within the mindset of your budget. “You’ll be better for it if you’re moving into the new year charting a new financial course or building on positive momentum, rather than trying to dig yourself out of a hole of debt,” advised McBride.

If you’re determined to use a Black Friday loan, be sure to have a plan to pay it back, especially if you’ll have to pay a high interest rate. “Consider how long it will take you to pay it back,” Tayne says. “You will want to pay it off as quickly as possible to avoid paying more in interest.”

Black Friday loan alternatives

If you’re considering a Black Friday loan, be sure to check out alternative ways you might check off your holiday shopping list.

  • Sell items or get a part-time job: “Consider purging unused items like old cell phones or clothing to sell,” says Lacey Langford, an accredited financial counselor. “Getting a part-time holiday job is another way to earn extra money for the holidays. Plus, if you get a job at a retail store, you can use your employee discount to save on purchases.”
  • Get a side hustle: Like a part-time job, a side hustle is another way to earn a bit of extra money. Earning extra income can help you have extra money for Black Friday deals without blowing up the rest of your budget.
  • Zero-interest credit card: Another alternative to consider is a 0 percent APR credit card that lets you avoid paying interest on purchases for a limited time. Some of these cards also let you earn a sign-up bonus and rewards for each dollar you spend. Just make sure you pay off the balance before the introductory period is over because these cards tend to carry higher interest rates.
  • Start saving now for next Black Friday: One way to prepare for the holidays is to set up a savings account or sinking fund to plan for next year’s holiday shopping season. “The holidays come at the same time every year, so they shouldn’t sneak up on you,” McBride says. “If holiday shopping is that important, set aside money regularly throughout the year so you can pay cash when the time comes.”
  • Build a shopping list before you go Black Friday shopping: Saving 40% on something that you don’t need is a waste of 60% of your money. Retailers are good at convincing you that you “need” something that is more of a “want”. Making a shopping list of what you plan to buy can help keep you from impulsively spending more than you can afford.
  • Make sure Black Friday deals are actually deals: While there’s no doubt that there are amazing Black Friday deals that are truly “once in a year”, those are usually extremely limited. Most Black Friday sales are discounts, but not much more than you can find on other sales throughout the year. Know what the prices are for the items on your shopping list and what makes for a great deal.

The bottom line

Black Friday loans are readily available and easy to apply for, but that doesn’t mean they’re a smart option. Take the time to figure out if there is another way to cover holiday gifts that won’t involve taking on new debt. If you do have to borrow, have a plan to repay your loan in a reasonable amount of time.

If you fail to take those steps, you could wind up paying off Black Friday deals for years to come. When you tack on the interest and fees you’ll pay, the savings won’t be worth it.

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Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson writes expert content on personal finance, credit cards, loyalty and insurance topics. In addition to writing for Bankrate and, Johnson does ongoing work for clients that include CNN, Forbes Advisor, LendingTree, Time Magazine and more.
Edited by
Loans Editor