Holiday spending debt soars: 66% of Americans plan to borrow this year
Source: Debt.com
FORT LAUDERDALE, Fla., Nov. 25, 2024 /PRNewswire-HISPANIC PR WIRE/ — Debt.com ’s annual holiday shopping survey finds that 66% of Americans plan to go into debt for holiday shopping this year. The survey, which asked 1,000 Americans about their spending habits, shows that rising use of credit cards and buy now, pay later (BNPL) services is driving the trend.
The main conclusions are:
26% expect to incur between $100 and $300 in Christmas debt
13% estimate between $300 and $500 in debt
17% plan to accumulate between $500 to $700 of debt
19% expect between $700 and $900 in debt
15% anticipate $900 to $1,000 in debt
10% think they will take on more than $1,000 in Christmas debt
“Americans are feeling constrained this holiday season, and it’s not just because of inflation,” said Howard Dvorkin , CPA, president of Debt.com. “The combination of convenience tools like BNPL and the allure of AI-recommended gifts can make it dangerously easy to overspend. This situation creates a perfect storm for debt that consumers will continue to pay off long after the Christmas lights come down.”
Americans turn to BNPL and credit cards, taking on more than $900 in debt for Christmas
The study also found that two in three respondents plan to use both credit cards and BNPL to fund their holiday shopping. Alarmingly, one in four people said they expect to go into at least $900 of debt to cover holiday spending. Many will rely on AI to recommend ideal gifts for their loved ones.
Regarding the influence of AI on expenses, the following was observed:
65% said they would spend more on gifts recommended by AI
26% admitted they would finance purchases recommended by AI
29% said they would not increase spending or fund AI-recommended purchases
“AI and BNPL are changing the way Americans shop, for better or worse,” Dvorkin said. “AI-powered recommendations are incredibly persuasive, and BNPL options make financing large purchases deceptively simple. While these tools can be helpful, they also require greater discipline from consumers.”
According to the survey, 88% of respondents plan to use credit cards for their holiday shopping, with 69% using both credit cards and BNPL. Among BNPL users, clothing is the most popular item to finance (62%), followed by electronics (46%) and jewellery (45%). Encouragingly, 70% said they would create a BNPL budget to avoid overspending.
Generational breakdown
Millennials (77%) lead the way in combining credit cards and BNPL to finance holiday shopping, followed by Gen X (73%) and Gen Z (67%). Millennials and Gen X are also more likely to spend more when AI suggests the “perfect” gift, with 71% across both groups indicating they would spend or finance more.
Budget for BNPL breakdown by generations:
- 76% of millennials
- 74% of Generation X
- 67% of Generation Z
- 57% of Baby Boomers
“Holiday shopping debt is nothing new, but the intersection of AI technology and BNPL financing is a unique challenge this year,” Dvorkin said. “Consumers need to remember that debt has a ripple effect. While AI and BNPL offer convenience, it’s critical to shop within your means and plan for the financial consequences of overspending.”
About Debt.com: Debt.com is a consumer website that provides resources for managing credit card debt, student loan debt, tax debt, credit repair, bankruptcy, and more.
