Tags: credit card debt | holiday retail sales | post-pandemic economic recovery | Millennials

This Holiday, Shoppers Gladly Pulling Out Their Credit Cards

holiday credit card
(Dreamstime)

By    |   Thursday, 11 November 2021 12:16 PM EST

After the coronavirus pandemic lockdowns of 2020 and bumpy re-opening in 2021, over four in 10 Americans are now willing to spend big this upcoming holiday season -- even if it means entering into debt. Americans seem to be more prone to pull out their credit cards or to run up store credit this season -- but at the same time, they want to shop smart and cut costs, two recent Bankrate reports found.

Millennials in particular are likely to open their wallets this year, but among all age groups, the overriding theme seems to be striking a balance between running up a credit card tally, and cost-cutting measures like coupons or store credits like "Macy's cash".

Just Want to Be Happy

About 4 in 10 (41%) of holiday shoppers say they are more inclined to go into holiday shopping debt this year. Forty-five percent are willing to go into debt “to make themselves happy", and 60% “who already have credit card debt are willing to take on more debt during the holidays”.

Despite the significant number of Americans willing to go into debt this holiday spending season, the November 2021 study found most Americans are not looking to increase their spending. Forty-eight percent intend to spend the same as the 2020 holiday season, and only 13% plan on increasing their spending from last year.

There are also retreats in spending in the decorating category, followed by entertaining, gifts and travel. This shows that although some Americans may be becoming slightly more frugal on their holiday spending habits, still, a significant number, 41%, are willing to go into or accumulate debt when holiday shopping.

The study additionally found that holiday spenders are willing to use coupons, store sales, and giving homemade gifts to cut costs. The eagerness to reduce costs through coupons and store sales tracks with record inflation under the Biden Administration, as a new report Wednesday showed prices rising more than they have in the past 30 years. Spiking gas prices, rising energy costs this winter, and wages not keeping pace with the record inflation growth are key factors as to why Americans may want to cut gift-spending costs, when buying presents for their friends and their family.

Overall, Ted Rossman, senior industry analyst for creditcards.com, says: “Retail sales are setting records, even in the face of some rather downbeat consumer confidence data.”

Like many cultural trends, younger generations often drive them, and this year’s holiday spending forecasts are no exception. Millennials in particular are looking to spend big this holiday season. According to a November 10th, 2021 report from Creditcards.com, Millennials are the generation most willing to go into debt, with 56% of these folks, born between 1977 and 1995 and sometimes called "Echo Boomers," saying they are willing to accrue debt this holiday season.

Following Millennials is country’s youngest adult generation, Gen Z, born between 1995 and 2010. Just under half, 49%, of Gen Z spenders say they are willing to enter into holiday debt. Baby Boomers are the generation least willing to enter into debt.

As to just how much holiday cheer they are willing to shower on their loved ones, Millennials top the list, with members of this generation willing to spend about $326 per child under the age of 18. This is $78 more than what Gen X spenders plan to spend on each child under the age of 18.

The Downside of Running Up Debt

Finally, Millennials seem keen on using “Buy Now, Pay Later” payment services this holiday season. Resources like Affirm, Afterpay, and QuadPay are increasing in popularity and recognition. With this, Gen Z and Millennials, respectively, are most willing to use their services to buy their gifts now, and pay later through the apps listed above.

However, Ana Staples of Creditcard.com warns: “Paying in installments may make the purchase sound cheaper. In reality, of course, it’s purely psychological – a loan is a loan, and the borrower has to pay it off, with or without interest.” Staples mentions that “These recent findings worry me. Debt is almost always something to avoid. It hurts your financial situation and causes stress and anxiety.”

Staples is right to be concerned, with the Federal Reserve Bank of New York announcing on November 9th that American household debt is at record highs.

In conclusion, like the broader retail market, Americans are looking to strike a highwire act between spending this holiday season, accruing debt -- and at the same time, trying to tread above water in an era of record inflation.

© 2024 Newsmax Finance. All rights reserved.


StreetTalk
After the lockdowns of 2020 and bumpy re-opening in 2021, over four in 10 Americans are now willing to spend big this upcoming holiday.
credit card debt, holiday retail sales, post-pandemic economic recovery, Millennials
763
2021-16-11
Thursday, 11 November 2021 12:16 PM
Newsmax Media, Inc.

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