Despite various reports of consumer optimism towards holiday spending this year, new data from Credit Karma reveals almost half (43 percent) of Americans feel debt is unavoidable during the holidays.
When surveyed over half of respondents told Credit Karma they would choose to forgo purchasing holiday gifts if they could. A large majority, 81 percent, consider buying gifts for family as the top reason for holiday debt. A closer look showed gifts for kids would the number-one expense (42 percent), followed by gifts for immediate family (39 percent) and gifts for significant other (25 percent). When asked how they would otherwise spend on holiday-related expenses, if gift-giving was not a concern, 21 percent said the money would be used on travel and an additionally 21 percent said they would use it to pay debts.
Experience came in second as a reason for holiday debt with 20 percent of respondents crediting travel expenses and 17 percent looking at holiday meals as reasons for impending debt.
Though even given expectations of debt, Americans say they will spend. Almost half (42 percent) of Americans expect to incur at least $500 in debt. And 90 percent of Americans who plan to take out a loan for the holidays, this year, plan to keep it a secret from friends and family. “We’ve heard from our members that stress can lead to more spending which perpetuates the cycle of debt,” said Dana Marineau, vice president and financial advocate at Credit Karma, “Meaning, when people make impulsive purchases to cope with stress, it often leads to more stress, which in turn can lead to more spending.”
Holiday spending is a stress that is felt year-round for some. According to Credit Karma, 22 percent of Americans who saw debt last year in financing the holidays are still paying off that debt now. Still, consumers report more stress during the holiday season, with 45 percent saying they feel immense stress ahead of the holidays and 25 percent reporting they argue with significant others about holiday debt.
To better handle holiday spending, Marineau recommends that consumers limit card use, keep budgeted gift lists, avoid “FOMO” spending, and, if it makes sense, take advantage of a travel rewards card.
For More WWD Business News: