On November 26, 2024, a woman shopped at a Target store in Chicago.
Kamil Krzaczynski | AFP | Getty Images
Go to holidaymany Americans are already burdened with record-breaking credit card debt. However, consumer spending is set to hit new highs this quarter.
The National Retail Federation reported last week that spending between Nov. 1 and Dec. 31 “clearly on track” Reaching a record between US$979.5 billion and US$989 billion.
“Job and wage growth, moderate inflation and healthy balance sheets led to solid holiday spending,” NRF chief economist Jack Kleinhenz said in a statement.
But other reports show that many shoppers are increasingly relying on credit cards to manage their holiday shopping.
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So far, 36% of consumers have Heavy debt this quarterthe most recent one Report Discovered by LendingTree. Those stuck in the red gained on average $1,181That’s $1,028 in 2023, according to a survey of more than 2,000 adults.
“No one should be surprised that so many Americans are in debt this holiday season,” said Matt Schulz, chief credit analyst at LendingTree. “Prices remain high, which means many Americans simply don’t have any options.”
“Inflation continues to be a big problem in this country and it has a huge impact on people’s finances, including their holiday expenses,” he said.
Credit card debt hits record high
Heading into the holiday shopping season, credit card balances are already up 8.1% from the same period last year, according to the Federal Reserve Bank of New York. Household Debt Report.
Additionally, 28% of credit card users have yet to pay off gifts purchased last year, according to another holiday spending report. Nerd WalletThe poll of more than 1,700 adults was conducted in September.
In some cases, Americans’ willingness to spend is a sign confidenceSchultz pointed out. “Some people definitely take on debt because they don’t have any other options, while others do it because they want to splurge and don’t care about paying a little extra interest to get what they or their loved ones really want. thing”.
However, credit cards remain one of the most expensive ways to borrow money. The average interest rate on credit cards currently exceeds 20% – close to record high. The APR on some retail cards is higher.
Credit card problem
LendingTree also found that among those in debt, 21% expect it will take five months or more to pay off their debt. Schutz said that at this rate, sky-high interest rates will cause heavy losses.
“That means less money for other big New Year’s goals, like growing your emergency fund or saving for college,” he said. “In more extreme cases, it could mean a reduction in your ability to pay basic bills or put food on the table. Either way, it’s a big deal.”
