Thanks to online giants like Amazon, the holiday shopping season is underway.
According to a new report from NerdWallet, consumers are expected to spend $17 billion more on gifts this season ($201 billion total) compared to last year.
“People are planning to spend more money this year on average, $925 on gifts. And what’s surprising is that they are actually sacrificing some monthly bills and turning to emergency savings in order to make those payments,” says Kimberly Palmer, personal finance expert with NerdWallet.
Its 2024 Holiday Spending Report says while 74 percent of shoppers plan on using credit cards to make purchases, nearly 30 percent of shoppers have yet to pay off their balances from last year.
“Once you start turning to credit card debt and other forms of financing to buy holiday gifts, it can easily snowball out of control. And that’s because interest rates are still so high on credit card debt. They’re on average above 25 percent. So you’re paying 27 - 28 percent on that debt. And so it just adds to itself over time and it can be very difficult to pay off. And so even though people are so eager to celebrate the holiday season, you just want to be mindful of not adding to financial stress and going into the new year with even more debt,” Palmer says.
Here’s another shocker from the report: Americans will spend $46 billion more on travel this holiday season ($300 billion total) compared to last year, with travelers averaging $2,330 in expenses.
The best way to avoid that stress is to do some holiday research, create a budget, and stick to it. Avoiding those 20 percent plus interest rates will also be key.
Palmer says, “The best strategy is definitely still to make your list early and also to talk with friends and family that you’re exchanging gifts with because it’s possible everyone wants to scale back this year. And if you have that discussion early, then you can all agree to spend less or have some kind of spending cap, for example, on the gifts that you plan to buy.”