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Consider a swap party instead of a loan to buy gifts

[Dec 11, 2010.]


Are you thinking of getting a fast loan from a payday lender to buy Christmas gifts? Or maybe you are gathering up items you no longer want and planning to trek to the local pawn shop to get a personal loan. Instead of taking out a high-interest loan, why not consider hosting a swap party with some friends to score some great stuff.

Why you may want to avoid a loan

Taking out a small personal loan can give you access to cash to hit the malls and get gifts for your friends and family. But do you really want to run up debt over the holidays? Personal loans from banks may carry double-digit interest rates if you don't have the best credit. Borrowing from a bank is one way of getting a personal loan, but you may not qualify if you already have a large amount of debt.

While it's easier to borrow money from a payday lender or pawn shop, you'll pay big time for the privilege. With a pawn shop loan you risk losing an item that you may actually want to get back, plus you won't receive what the item is actually worth. Payday loans have exorbitant rates of interest that can top 300 percent, and it's easy to get sucked into a never-ending cycle of debt. It's best to avoid these quick loans for your own financial health.

Swapping good stuff

An alternative to borrowing money is to hold a swap party with friends and family members for whom you would normally buy gifts. Why not agree to each bring clothing, books, music, jewelry, art and other items that are still in excellent condition that can be traded. Instead of spending money, you can all benefit by getting stuff for free. If you're worried about a fair trade, specify a minimum and maximum value for items. Don't include items that you really want to keep in the swap.

Make the party as festive as you like. Free food adds to the appeal: have each participant bring a dish to share. If clothing is involved, make sure to invite at least two or three guests of a similar size so they'll have items to choose from. The good thing about hosting a swap party is that you and your friends can clean out some of the clutter and get some "new" things without taking out a loan or running up credit card debt.


About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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