American consumers are entering the holiday shopping season, along with Black Friday, with an alarming amount of debt left over from last year's holidays, USA TODAY reports, writes UNN.
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In one survey on holiday shopping, personal finance site Wallet Hub found that 47% of consumers still have debts from last holiday season.
In another survey, NerdWallet found that 28% of consumers who used cards to buy gifts in 2023 did not pay off their balances.
A third survey conducted by Intuit CreditKarma found that a third of consumers enter the holidays with at least $5,000 in debt.
"Americans are entering the holiday season at a loss," said Emily Childers, a consumer finance expert at Credit Karma.
Credit cards in the country look grim. Half of all cardholders have debts from month to month as of mid-2024, which is the highest rate since the beginning of 2020.
According to LendingTree, the total card balance in the country is a record $1.17 trillion. The average cardholder with debt owes $7,236. The level of delay is increasing.
To make matters worse, credit card interest rates are higher than ever. The average rate on the card is 20.42%, according to Bankrate. This is a hair below the record high of 20.79% set in August.
Retail credit cards, popular during the holiday season, have even higher rates. The average rate on store cards reached 30.45% this year, which is a record high, according to Bankrate.
"This is definitely not the holiday season when you want to borrow," said Melissa Lambarena, a personal finance expert at NerdWallet.
Obviously, Americans are worried about holiday debts. Most consumers are stressed about holiday spending, according to an Experian survey. Almost two thirds of customers admit that they spend too much.
However, many consumers plan to continue spending and borrowing during the holiday shopping season.
In a NerdWallet holiday survey, three quarters of consumers said they plan to put gifts on credit cards rather than pay in cash.
In a WalletHub survey, 52% of shoppers said they plan to apply for a new card for holiday shopping.
Holiday Survey Debt.com It showed that 66% of buyers plan to take out a loan during the holiday period.
"Americans are feeling squeezed during the holiday season, and it's not just about inflation," said Howard Dworkin, chairman Debt.com . Dvorkin said his company has surveyed consumers about debt in past years, and for those planning to take out a loan for the holidays, "it used to be below 50%.
Buyers can also spend more time paying off their debts. WalletHub surveys shoppers annually during the holiday season. In 2022 and 2023, about a quarter of consumers said they were still paying off debts for the past holiday season. In 2024, this share increased to 47%.
"So we're talking about double the amount," said Chip Lupo, author and analyst at WalletHub.
Some cardholders simply stop making payments on their holiday debts. According to federal data, the national delinquency rate exceeds 3%, which is the highest in more than a decade.
Most often, consumers make only minimal payments on their cards. If you make the minimum payment, you are probably paying off the debt very slowly.
"And it won't do anything except make it more expensive," Lupo said.
Bankrate has calculated that if you start with $1,000 in card debt at 17% per annum and pay the minimum, you will still owe $886 after 12 months.
Many consumers try to circumvent high interest rates with interest-deferred promotions. In a typical scenario, a customer makes a large purchase on a store card, and then has six or 12 months to repay it without any interest.
В "черную пятницу" украинцы нарастили покупки с оплатой картами почти на четверть29.11.2023, 11:05