Credit Scores and Reports

What if Santa charged Christmas?

His minimum payment due would be staggering


If he did charge Christmas, just how much would Santa spend – and pay back with interest? And what interest rate, minimum payment or rewards might Santa expect to see on his credit card statement?

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With 50 million children age 11 and under in the United States alone to provide gifts for, Santa would be up a creek without his busy elves. But what if an Elf Civil Liberties Union strike hit – grinding all gift-making to a halt until Santa had time to mediate with the ECLU’s lawyers? What would Santa do? Pull out his plastic? We can imagine that his credit card’s magnetic stripe would be worn out in a hurry.

If he did charge Christmas, just how much would Santa spend – and pay back with interest? And what interest rate, minimum payment or rewards might Santa expect to see on his credit card statement?

Here’s a look at what type of card would be best for jolly old St. Nick, what all that charging would do to his credit score and what his credit card statement might look like once he’s all done.

See related: Your holiday credit card self-defense guide

A card fit for a Kringle
Although many Americans might be lured by cards offering frequent flier miles, analysts say Santa’s best bet (and yours, too), is a card that offers cash back as a bonus. “That way you, and Santa, can choose exactly what you’d like to spend the money on,” says accountant Lisa Baskfield, a member of the American Institute of Certified Public Accountants’ National CPA Financial Literacy Commission.

Besides, why would Santa need a “miles card,” when he already has a private sleigh to get him around the world on Christmas Eve?

“Many ‘high cash-back,’ low-introductory rate cards require excellent credit scores, so Santa should check his three scores before applying,” says Baskfield.

If Santa set a very modest budget of $25 per child, he would charge a little over $1.36 billion, including an average .08 percent sales tax. We’ll assume that gift-wrapping is included.

And if he opted for a cash back card, Santa would receive a nice chunk of change just by shopping at the right stores. “Some cards offer a special holiday bonus of up to 5 percent back on purchases at department, clothing and electronic stores. If all of Santa’s gifts were bought in these stores during this bonus period, he could receive $63 million in cash back,” says Mallie Daniel, president and CEO of Wealth Creation Advisors, a Houston financial, estate and retirement planning company.

But are rewards worth it?

It depends on who you ask.

Shoppers are usually quick to say they like seeing the cash back or miles add up with each purchase. But experts say unless you – and Santa – plan on paying off the entire balance every month, the rewards just aren’t worth it.

“In Santa’s case, he’d pay about $82 million in interest, much more than the $63 million in cash back rewards he received,” says Howe.

Paying off Santa’s bill
Once Santa’s midnight run is done (thank goodness the reindeer belong to the more easy-going International Federation of Reindeer union) and he’s back home with Mrs. Claus, his postal carrier is going to need an extra large knapsack to cart Santa’s credit card statement.

“Santa’s minimum due would be eye-popping,” says Daniel.

The payment would probably be calculated by the card’s interest rate plus 1 percent of the balance, and Daniel says if Santa’s card had an 12 percent interest (one of the lowest major card interest rates available), his minimum monthly payment would be $27,216,000. “It would take Santa 46.4 years to pay it off.”

To pay off this Christmas before next December, Daniel says Santa would need to shell out $127,008,000 a month (for a card with a 12 percent interest rate). If he had a no-interest card for 12 months, his monthly payment would be only $113,400,000.

See related: 8 tricks to not rack up card debt during the holidays

Santa’s credit score
Credit utilization ratio is the ratio of your credit card debt to your credit card limits and is the second biggest influence on your credit score. If Santa maxed out his credit this Christmas, Daniel says his credit utilization ratio would be 0. “That’s not good,” says Daniel.

“But as Santa pays off his bill during the year, his credit utilization ratio would get higher and higher, giving his credit score a boost month after month.”

Of course, the impact of Santa’s credit utilization ratio depends on his credit history.

“If Santa has a long credit history, which he likely does since he’s been around for hundreds of years, the initial hit to his credit score might not be severe,” explains Howe.

However, if Santa were young and had a new credit history, his credit score could crash.

A recent study by revealed that opening a new card with a $2,500 balance reduced credit scores by as much as 52 points for those with a shorter credit history – or who had missed payments. Consumers with longer, stellar credit histories had almost no change in their scores – many just dropped two points.  Yet, people with no debt and no credit cards saw their three scores increase by as much as 10 points.

See related: 8 ways to stay debt-free during the holidays,

Regardless of the size of the initial drop in Santa’s credit score, those three little numbers would probably rise throughout the year if he made all his payments on time. “And could be back to the original score he had before charging this Christmas – or higher – by this time next year,” says Daniel.

Daniel has these tips to help Santa and his consumer “elves” make sure their credit doesn’t take a hit during the holidays.

  • If you use a credit card for your purchases, use one that offers 0 percent interest for the first 12 months (or longer). This would save Santa $163,296,000 in interest the first year.
  • If you’re planning on charging all the gifts on your list, use more than one credit card and don’t max out any one card to keep your credit utilization ratio low, and keep your credit score up.
  • Don’t just pay the minimum due, it takes almost forever to pay it off.

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