A recent report from WalletHub reveals that the number of Americans grappling with holiday debt has nearly doubled since last year. In a new survey, 46% of respondents admitted to still carrying holiday debt from last year, compared to just 25% around the same time last year.
This increase in debt may indicate that the broader economic trends, like inflation cooling, aren’t significantly easing financial pressures for many Americans.
Last year, about 34% of shoppers reported they would skip gifts altogether during the holiday season due to financial stress, according to the WalletHub 2023 holiday shopping survey.
For 2023, around 19% of Americans plan to apply for new credit cards to fund their holiday shopping, which could further strain their finances.
Experts suggest that creating and adhering to a budget is essential to avoid accumulating debt during the holiday season. Unfortunately, many people struggle to find extra funds for gifts after meeting their essential expenses, leading to mounting debt, often compounded by interest.
“Going into debt for non-essential items, even when they involve giving, is unwise,” said Beene. “Consider the long-term consequences; if you can’t care for yourself, you can’t care for others. You might not have to eliminate your gift list entirely, but cutting back where possible is wise. No one wants to be paying off holiday debts months or years later.”
As costs of gifts rise amid ongoing inflation, many are shifting from material gifts to experiences with loved ones. According to a 2023 NerdWallet report, 36% of shoppers prefer sharing experiences instead of exchanging gifts, and 26% intend to talk about spending limits for holiday gifts.
Last year, Americans averaged a spend of $831 on holiday gifts, a figure expected to increase as prices of everyday goods rise.
“Prioritize essential spending, and try to set aside funds for emergencies,” experts advise. “If that means cutting back on holiday expenses, it will pay off in the end. Carrying high-interest debt will only make next year more challenging.”