Washington: A recent holiday debt poll by LendingTree, the country’s online lending marketplace, reveals that 36% of Americans took on holiday debt this Christmas season, a slight increase from 34% a year ago. The average debt accrued rose to $1,181, up from $1,028 during the same period in 2023, highlighting the growing financial burden on consumers amidst persistently high inflation.
Financial Strain and Regret
The survey found that only 44% of individuals who incurred holiday debt did so intentionally. A significant portion—60%—reported feelings of anxiety about their spending, and 42% expressed regret over their expenditures.
Among those who accumulated debt:
- 65% used credit cards,
- 21% relied on buy-now-pay-later (BNPL) loans,
- 19% opted for personal loans.
The report also noted that 42% of borrowers faced interest rates of 20% or more, further exacerbating financial stress.
Long Road to Repayment
For many, the journey to financial recovery is expected to stretch well into the new year. 21% of respondents anticipated taking five months or more to repay their debts, while 20% indicated they would make only minimum payments.
Inflation’s Role
Matt Schulz, chief credit analyst at LendingTree, emphasized the impact of inflation on holiday spending. “Inflation would probably force you to spend more this year if you merely purchased the same items as you did last Christmas,” Schulz said. “That implies you have to either reduce your gift-giving or take on additional debt for a lot of Americans.”
Retail Trends
Despite the financial challenges, US retail sales showed resilience, with Mastercard reporting a 3.8% year-over-year growth in total retail sales from November 1 to December 24. According to Mastercard SpendingPulse, 10% of all Christmas spending occurred during the final five days of the season, underscoring a last-minute shopping surge.
As inflation continues to impact household budgets, the trend of rising holiday debt may persist, leaving many Americans to grapple with the financial consequences well into the new year.
