Nearly half of Americans are still paying off 2023 holiday debt, survey says
Nearly half of Americans are still paying off 2023 holiday debt, survey says
Everywhere you look these days, someone or something is encouraging you to spend money. There’s the obvious — ads on social media and television and in newspapers, as well as the subliminal — storylines in movies and books.
“This is very much part of our culture,” said Ayelet Fishbach, a professor of behavioral science and marketing at the University of Chicago Booth School of Business. “Even in places where we don’t expect someone to influence us to buy, everything is influencing us to buy, to consume.”
And all that messaging really ramps up around the holidays.
“There is a lot of advertisement that tells us that this is the right way to celebrate,” she said.
By buying a lot of gifts. It’s such an integral part of the holiday season that many people go into debt to do it. A recent survey from WalletHub found that nearly 50% of Americans are still paying off debt from last year’s holidays. That’s double the percentage who were paying old holiday debt at this time in 2023.
“People want to have a good holiday. They want to celebrate with their kids and other family members and friends,” said Ted Rossman, senior industry analyst at Bankrate. “It’s one of the two main times of the year that people splurge. The other one would be summer vacation. But holidays are really No. 1 in terms of a big spending spike.”
Every year, credit card balances tend to rise significantly in the fourth quarter and then go down again in the first quarter of the new year as people pay off their bills. But lately, more people have been carrying balances than in the past.
“Six in 10 people with credit card debt have had it for at least a year. That’s up 10 percentage points from three years ago,” Rossman said. “It’s easy to see how somebody would be paying off this holiday season a year from now, or worse unfortunately.”
Especially in the last few years, with inflation and interest rates high.
“Carrying debt on a credit card has gotten a lot more expensive,” said Chi Chi Wu, senior attorney at the National Consumer Law Center.
The average interest rate on credit cards is now over 20%, which can be hard to keep up with if you don’t pay off the balance right away. That reality is showing up in a couple of ways. Not only are more people carrying a balance these days, but those balances are rising.
“It’s a sign, I think, of consumers struggling financially, barely making it,” Wu said.
Rossman believes that for some people, buying things for themselves and others might be partly a reaction to the financial stress of the last few years.
“That whole idea of whether you call it revenge spending or doom spending,” he said. “Sometimes people are saying, hey, I’m not feeling great about things, but at least I can treat myself or my family on this or that or the other thing. And we do see some of that around the holidays.”
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
