With Christmas around the corner, many Americans are still struggling to pay off credit card debt from last year.
A recent WalletHub study found that nearly half of Americans are carrying holiday debt from 2023, and many are expected to add to it this season.
“The fact that people are still paying off debt from last holiday season makes you wonder if they are going to fall into that trap again or are they cutting back because of last year’s debt,” remarked Chip Lupo from WalletHub.
The data shows that holiday debt has doubled over the past year, with nearly one in four Americans carrying over unpaid balances from the previous Christmas in 2023.
This persistent debt comes as Americans face heightened economic pressures. Inflation has significantly impacted holiday spending habits, with 68% of those surveyed saying they plan to keep Santa on a tighter budget this year.
According to WalletHub, holiday budgets now vary widely depending on income, existing debt, and cost of living, ranging from as low as $200 to more than $4,000.
Despite attempts to cut back, spending continues to climb. Gallup’s annual survey reports that the average American will spend $1,012 on Christmas this year, a slight increase from $975 in 2023. Rising expenses in travel, meals, and gift shopping appear to be the primary drivers of this increase.
Credit card debt, already a burden for many households, compounds the issue.
The average American household carries $10,757 in credit card debt as of the third quarter of 2024, adjusted for inflation. To cope with holiday expenses, 52% of respondents in the WalletHub study indicated they would consider applying for a new credit card.
Inflation has also dampened charitable giving, with 72% of Americans reporting they have reduced their contributions this year.
Meanwhile, more than half of those surveyed—55%—expressed interest in outsourcing their holiday shopping to artificial intelligence, signaling a shift in how Americans approach seasonal stress.
For those planning to travel, there is some relief at the gas pump. Washington gas prices have dropped by 26 cents per gallon compared to last year, with the average price currently at $3.91. Nonetheless, this is still 90 cents more than the national average, highlighting the difficulties that citizens in some states face.
With credit card debt mounting and inflation persisting, many Americans are bracing for another financially challenging holiday season.
As spending trends continue upward, financial experts caution against falling into the same debt traps and urge Americans to be mindful of their budgets during the holidays.