Dive Brief:
- Half of U.S. consumers expect to take on debt to pay for the holidays, and 37% said it will take them two or more months to pay their bills, according to the 2023 Season of Spending survey by the personal finance company Achieve.
- Compared to last year, 59% of consumers are planning to spend the same as they did a year ago. Twenty-one percent of respondents are planning to spend more this year, and 20% have reduced their spending from 2022, according to the survey of 1,000 U.S. consumers aged 18 and up.
- Among the factors affecting consumers’ ability to stay on budget are finding discounts for gifts (51%), not buying gifts for too many people (33%) and earning enough money during the holiday season (26%), according to the survey results.
Dive Insight:
Achieve’s survey found key differences in consumers’ preferred holiday payment options based on household income, with some consumers relying more on credit cards to cover their holiday expenses than others. While 46% of households earning $50,000 or more are paying for their holiday expenditures with credit cards, only 23% of families with incomes below $50,000 are doing the same. Forty-percent of households earning less than $50,000 are using debit cards and checks to cover their holiday costs, and 25% of that segment are using cash.
Previous research suggests that consumers had to take on debt last year to cover their holiday spending, but recovering from the spending spree might have taken longer. According to a LendingTree holiday debt survey, 35% of U.S. shoppers in 2022 took on debt to pay for their holiday purchases, down from 36% the year prior. LendingTree found that 37% of survey respondents last year said they anticipated paying their debts for over five months or more.
This year, consumers are heading into the holiday shopping season with some budgetary constraints. Credit card debt surpassed $1 trillion in the second quarter of this year, according to data from the New York Federal Reserve Bank. Following the Supreme Court’s decision to strike down President Biden’s student debt forgiveness plan, headed into the holiday season U.S. borrowers were expected to pay an average of $300 per month on their student loan debt balances, according to consumer data firm Earnest Analytics.
