Customers visit Macy’s Herald Square store in New York on December 17, 2023.
Kena Betancur | Corbis News | Getty Images
For some buyers, the next holiday season can lead to significant credit card debt. Meanwhile, some people are continuing to pay off debt from last year’s gift purchases.
In fact, 28% of shoppers who used credit cards didn’t pay for gifts they bought for family and friends last year, according to a recent holiday spending report by Nerd Wallet. The site surveyed more than 1,700 adults in September.
“Between buying gifts and booking trips during peak season, the holidays are an expensive time of year,” said Sara Rathner, credit card expert at NerdWallet. “Not only are consumers at risk of racking up credit card debt, but that debt can persist long after the decorations come down.”
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The stakes are higher in 2024 with credit card debt already at $1.14 trillion.
This year, spending between November 1 and December 31 is expected to increase again to a record total of $979.5 billion to $989 billion, according to the report. National Retail Federation.
Shoppers can spend $1,778 on average, an increase of 8% from last year. Deloitte Holiday Retail Survey find. Most will rely on plastic: About three-quarters, or 74%, of consumers plan to use credit cards to make purchases, according to NerdWallet.
Meanwhile, credit cards are one of the most expensive ways to borrow money. The average credit card charges more than 20%, or almost an absolute record.
How to avoid overspending
“Somehow this has been programmed into the American consumer, who is basically saying, ‘I have to spend a lot of money on the people I care about,'” said Howard Dvorkin, an expert. accountant and president of Debt.com.
It doesn’t have to be this way, he said.
“There is no magic wand, we just have to do the hard things,” said Candy Valentino, author of “The 9% Edge.” This means above all establish a budget and tracking expenses.
Valentino recommends reallocating funds from other areas – in cancel unwanted subscriptions or negotiate lower utility costs – to free up space for holiday spending.
“A few hundred dollars here and there really adds up,” she said. This “cash reserve is a way to prepare yourself so you don’t take on new debt.”
How to save on what you spend
Valentino also advises consumers to start your holiday shopping early to take advantage of early deals and discounts or try pooling funds among family or friends to share the cost of Christmas gifts.
Then, reduce temptation by staying away from the mall and unsubscribing from emails, turning off text alerts, turning off push notifications in retail apps, and stopping following brands on Twitter. social media, she said.
“It will reduce your need and desire to spend,” Valentino said.
Also consider an investment, such as individual stocks or bonds or a charitable donationinstead of gifts to create a more lasting impression. Making something from scratch, like cookies, a candle or a sugar scrub, can also be particularly meaningful, Valentino said.
