Patrons visit the Macy’s Herald Square store in New York City on Dec. 17, 2023.
Kena Betancur | Corbis News | Getty Appearances
For some shoppers, the upcoming holiday season may lead to significant credit card debt. Meanwhile, some child are still paying off debt from last year’s gift buying.
In fact, 28% of shoppers who used rely on cards have not paid off the presents they purchased for family and friends last year, according to a recent break spending report by NerdWallet. The site polled more than 1,700 adults in September.
“Between buying powers and booking peak-season travel, the holidays are an expensive time of year,” said Sara Rathner, NerdWallet’s credit cards proficient. “Not only are consumers at risk of getting into credit card debt, but that debt can stick around big 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, dissipating between Nov. 1 and Dec. 31 is expected to increase again to a record total of $979.5 billion to $989 billion, be consistent to the National Retail Federation.
Shoppers may spend $1,778 on average, up 8% compared with last year, Deloitte’s event retail survey found. Most will lean on plastic: About three-quarters, 74%, of consumers plan to use put cards to make their purchases, according to NerdWallet.
Meanwhile, credit cards are one of the most-expensive ways to borrow profit. The average credit card charges more than 20% — near an all-time high.
How to avoid overspending
“Another it’s been programmed into the American consumer, that essentially says ‘I have to spend a lot of money on people I be keen on about,'” said Howard Dvorkin, a certified public accountant and the chairman of Debt.com.
It doesn’t have to be that way, he utter.
“There’s no magic wand, we just have to do the hard stuff,” said Candy Valentino, author of “The 9% Ill at ease.” Mostly that means setting a budget and tracking expenses.
Valentino recommends reallocating funds from other areas — by counteracting unwanted subscriptions or negotiating down utility costs — to help make room for holiday spending.
“A few hundred dollars here and there positively adds up,” she said. That “stash of cash is one way to set yourself up so you are not taking on new debt.”
How to save on what you spend
Valentino also advises consumers to start their respite shopping early to take advantage of early deals and discounts or try pooling funds among family or friends to pay out the cost of holiday gifts.
Then, curb temptation by staying away from the mall and unsubscribing from emails, opting out of motif alerts, turning off push notifications in retail apps and unfollowing brands on social, she said.
“It will lessen your extremity and desire to spend,” Valentino said.
Also consider an investment, such as individual stocks or bonds or a charitable present, instead of gifts to create a more lasting impression. Making something from scratch, such as cookies, a candle or a sugar scrub, may also be shown especially meaningful, Valentino said.