The number of Americans who hold holiday debt has nearly doubled since last year, according to a new report from WalletHub.
In the new survey, 46 percent of Americans said they still had holiday debt from last year. Last year at around the same time, only roughly one in four Americans were still paying off their holiday debts.
“Inflation has taken a toll on basically every expense in Americans’ lives, and costs around the holidays are no different,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “There’s normally a feeling, though, around holiday spending that it’s an obligation, even if the consumer has to go into debt to meet that obligation.”
The uptick in debt could reflect that the economy’s larger inflation cooling isn’t making as much of a difference in many Americans’ personal finances.
Shoppers peruse at a Von Maur store at the Oxmoor Mall on December 22, 2023 in Louisville, Kentucky. Nearly half of Americans said they still have debt from last year’s holiday season.
Jon Cherry/Getty Images
Last year, a substantial number, roughly 34 percent, of shoppers said they would be skipping presents altogether during the holiday season due to financial constraints in the WalletHub 2023 holiday shopping survey.
In 2023, 19 percent of Americans said they would be applying for a new credit card to help with their holiday shopping, and those decisions might still be impacting their finances now.
Experts say that outlining a budget and sticking to it for your holiday shopping is the best way to avoid debt in the long run, but many still struggle to find any part of their income they can devote to gifts while still covering necessities. This can lead to substantial debt that only adds on interest as time goes on.
“Going into debt for non-essential items, even if they are in the spirit of giving, is a poor decision,” Beene said. “Remember the long-term implications. If you can’t take care of yourself, you’re not going to be able to take care of others. You don’t have to completely drop your gift-giving list this year, but you do need to cut back where possible. No one needs to be paying off the holidays months or even years after they’ve occurred.”
Due to the high costs of many gift items and today’s continuing inflation problem, there’s been a shift away from materialistic gifts toward one experiential moments with loved ones.
In a 2023 NerdWallet report, 36 percent of shoppers said they’d rather have an experience with a loved one instead of exchanging gifts. And 26 percent said they planned to discuss spending limits when it came to their holiday gifts.
On average, Americans planned to spend $831 on holiday gifts last year, and that number is only likely to grow as prices continue to rise on everything from groceries to clothing and household items.
“Americans continue to deplete their savings and take on more debt. Much of this can be attributed to rising costs of goods and services, particularly in areas like food, housing, and healthcare,” Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek.
“Focus on spending for life’s necessities and start setting aside whatever you can for emergencies. If that means cutting back on holiday spending, it will benefit you in the long run. Carrying over debt at high interest rates will only make things harder next year.”
