Holiday Shoppers Continue to Rack up Debt

Holiday shoppers descend an escalator. | Image by Ivanko Brnjakovic of stock.adobe.com.

Shopping for Christmas gifts can cost consumers a small fortune, and just like last year, many shoppers are turning to their credit cards and taking out loans to complete their holiday purchases.

Proper money management is crucial, especially in 2022, given the tumultuous, high inflation, and high-interest rate landscape Americans find themselves in.

Still, the holidays are that rare time of year when consumers set aside reservations and traditional spending habits and start swiping away with their credit cards.

In 2021 more than one-third of Americans took an average of $1,250 worth of credit card debt to afford their holiday shopping, according to a survey conducted by LendingTree.

Holiday shoppers who are not using their credit cards “don’t trust themselves not to overspend” and are more likely to avoid the urge to “put more money on the credit card and dig their hole deeper,” suggested Matt Schulz, LendingTree chief credit analyst, per USA Today.

The spending patterns of holiday shoppers will be more of the same in 2022, according to NerdWallet’s annual holiday shopping survey conducted by The Harris Poll, which surveyed more than 2,000 U.S. adults.

The survey’s key findings reveal inflation’s startling impact on the typical holiday shopper.

To start, the survey found that 31% of 2021 holiday shoppers who used a credit card to purchase gifts still have not paid off their balances. While nearly one-third of consumers used credit cards in 2021, the ratio is as high as 72% in 2022, or roughly three-quarters of holiday shoppers.

“Nothing can stop Americans’ love of celebrating the holidays — not even rising prices and economic uncertainty,” said Kimberly Palmer, personal finance expert at NerdWallet. “That means many shoppers feel squeezed financially and are taking on more debt to handle the extra demands on their budget.”

With Christmas less than a week away, most consumers have likely completed the bulk of their holiday shopping, adding $663 in average credit card charges this year, according to NerdWallet.

Credit card debt is not the only way consumers are finding the financial means to afford Christmas gifts this year — many are turning to non-traditional financing.

Approximately 11% of holiday shoppers plan on purchasing gifts using cash advance apps, while 7% of shoppers said they planned to use payday loans, according to NerdWallet.

These non-traditional financing methods were also mentioned in a separate survey conducted in early November by U.S. News & World Report.

The survey found that 19.6% of holiday shoppers carried a balance on their credit cards. Just 13.4% planned to use a buy now, pay later plan, but 8.7% carried a balance *and* planned on utilizing a buy now, pay later plan.

A complete holiday consumer spending report will be released sometime after the holiday season has ended.

Given Thursday’s better-than-expected GDP and jobless claims data and next year’s estimated consensus for more rate hikes, the report could reveal evidence of a weakened consumer in 2023.

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1 Comment

  1. V63

    Perhaps with aging comes restraint. Or stark reality. In retirement you learn to use common sense when it comes to finances. Or you simply don’t last very long. People who aren’t on a fixed income seem to think uncontrolled spending is sustainable. Trust me, it is not. Sooner or later the bills will come due. Spending more money than you have is a form of subscribed insanity. Something is wrong if your joy is only found in that gift you will forget about long before its paid for. Open your eyes and grow up and live within your means and don’t buy into the hype and crass commercialism of the moment. Find true happiness in those simple interactive exchanges with another human being.


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