Consumers Dodge Holiday Debt Without Sticking to a Budget

No sooner have you packed away the decorations and the rolls of wrapping paper than you are faced with the holiday credit card bills. Consumers planned to plunk down an average of $1,050 on holiday gifts in 2019, up 4% from the previous year, the National Retail Federation estimates.

If you went overboard during the season of giving, card balances could be weighing you down in the new year. But a U.S. News survey shows that consumers have largely avoided holiday debt.

About 62% of consumers said they were happy with their spending this holiday season. Most either paid off card balances or planned to pay them off soon with some old-fashioned belt-tightening.

As for next holiday season? Some consumers surveyed said they intend to save and budget for holiday spending.

Among the key U.S. News survey findings:

  • Only 16% of cardholders plan to carry holiday debt for two months or longer.
  • Few consumers need to consolidate holiday debt.
  • Consumers with holiday debt cite belt-tightening as the top way to pay it off.
  • Some consumers will save or budget for the next holiday season.

Most consumers didn’t take on debt this holiday season.

Nearly four out of five of consumers surveyed by U.S. News said they took on no debt this holiday season, and about 14% had less than $1,000 in debt. But about 3% racked up $2,500 or more.

Most consumers have paid their holiday balances.

About 84% of consumers polled by U.S. News said they won’t carry a balance from holiday purchases, and 54% said they didn’t use credit for holiday spending. The rest either paid off holiday balances or planned to pay them off within one month.

But about 6% said they have long-term plans to pay off their holiday debt and expect clearing balances to take five months or longer.

Consolidating holiday debts isn’t the plan for most consumers.

About 80% of consumers said they don’t have holiday debt, and among those who do, 17% said they don’t expect to consolidate it.

About 3% said they plan to use a balance transfer card to consolidate debt, and a little more than 1% plan to use a debt consolidation loan.

More than half of consumers didn’t stick to a holiday budget.

About 43% of consumers didn’t have a budget for holiday spending, and 11% surpassed their budget.

Few consumers opened credit accounts for the holidays.

A large majority, or 93%, of consumers said they didn’t get a loan or other line of credit during the holiday season.

Of those who took out credit, the most common types were credit cards, auto loans, payday or title loans, and home equity loans.

Belt-tightening is the main plan for consumers paying off holiday debt.

Consumers who need to wipe out holiday debt are taking a simple approach: About 7% said they’re tightening their budget for everyday expenses. Others are returning gifts, redeeming gift cards or rewards, or asking for a lower annual percentage rate, or APR, on credit cards.

Budgeting and savings are goals for the next holiday season.

Saving for the next holiday season is the top priority for 11% of consumers surveyed. Budgeting is key for 7%, followed closely by cutting back on gifts for 6% of consumers.

  • U.S. News ran a nationwide survey through Google Surveys in January 2020.
  • The survey sample came from the general American population, and the survey was configured to be representative of this sample.
  • The survey asked 10 questions related to holiday spending.

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