Many Americans Are Still Paying Off Last Year’s Holiday Debt

Posted by Viviana Vazquez in DebtDecember 6, 2021(Last Updated July 25, 2022)4 min read
Key Takeaways
  • According to a LendingTree survey, almost 50% of American consumers are not looking forward to the holidays, due to the expensive costs that come with them.
  • Almost 15% of American consumers are still paying off debt associated with holiday spending from last year.
  • $792 is the average amount Americans plan to spend on gifts this season, while parents with children are expected to spend an average of more than $1,000.
Are you ready to make some real money moves?

The holiday season is an exciting time for those who eagerly await it each year. However, holiday shopping and its associated costs can also result in financial stress for many. According to a survey conducted by LendingTree earlier this year, nearly half of Americans dread the holidays due to the costs.


High Holiday Expenses


Holiday purchases can slowly add up, resulting in credit card debt or lingering credit card balances for many. In addition, given the recent pandemic, the 2021 holiday season is expected to be a difficult one for many families and individuals. 


According to the LendingTree survey, a total of 48% of Americans dread the holidays due to their high costs. In addition, 40% of American adults are not looking forward to Christmas, while 13% were not excited for Thanksgiving. According to the survey, many Americans are also losing sleep over how they’ll pay for expenses related to the holidays. 


With inflation on the rise, costs associated with the 2021 holiday season are also expected to rise. Transportation and food costs alone may be stressful for families and individuals traveling and gathering with other family members. According to the survey, those with children are especially worried about the holidays, with 36% of parents reportedly losing sleep over holiday expenses.


Such high holiday costs can lead many Americans to turn to credit cards or personal loans to finance their way through the holidays. Those with good credit scores may be offered better deals, such as an introductory zero percent interest rate or a low-interest rate. However, many Americans will have to rely on credit cards or loans with the highest interest rate on the market.


Holiday Debt Among Americans


Debt among Americans is especially common during the holidays. In fact, according to the survey, 41% of Americans stated they believe they’ll likely go into debt during the holiday season. The same study found that 13% of Americans are still paying holiday debt from last year. According to LendingTree, more Americans expect to go into debt this year than last year.


Given that the average American spends $792 on holiday gifts, it is not surprising that many Americans expect to go into debt this season. Additionally, certain groups of people expect to spend more than the average. According to the survey, Millennials are expected to spend $829, on average, while Boomers are expected to spend an average of $803.


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According to LendingTree, parents with children under 18 are especially susceptible to debt as they feel the most pressure. The survey showed that 21% of parents are still paying off debt from the last holiday season and 51% expect to incur debt from holiday spending this year. In addition, more than half of them are also dreading the holiday season due to the high associated costs. However, they are not the only ones feeling the pressure. 


LendingTree reports that 40% of consumers feel pressure to buy gifts for others. Out of all groups, GenZers and Millennials felt it the most. According to the survey, 56% of Gen Zers and 50% of Millennials feel pressured into spending on others this holiday season. With so many Americans feeling financial stress and pressure, it is important to plan ahead and keep track of your finances to not fall victim to debt.


How to Avoid Holiday Debt


Avoiding holiday debt can be difficult, especially when you feel pressure to purchase gifts for family members or friends. One of the most important things to do in preparing for the holidays is establishing financial boundaries. Communicating your boundaries can help others understand your situation and financial goals. Although personal finance is not an easy subject to bring up, talking openly about finances can help you keep yourself accountable to stay on track this holiday season. 


Another way to avoid debt is to plan ahead, if possible. It is fairly easy for the holiday season to sneak up on you. If your budget has the capacity to save a small amount of money each month, a little can go a long way. By saving $20-$50 each month, you can find yourself having $240-$600 by the end of the year.


If you must use a credit card or personal loan this holiday season, plan to pay off your balance as soon as possible. Avoid paying only the minimum payment amount each month in order to minimize the interest you have to pay. Instead, calculate the maximum amount you are able to pay each month and ensure you are meeting all of your monthly payments. Also, watch out for high-interest rate loans and avoid them if possible.


Recommended: Four (4) Tips to Avoid Debt While Holiday Shopping


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If you cannot afford to spend money this holiday season or are on a tight budget, a homemade gift or experience can be an alternative to a store-purchased item. A handwritten letter or a fun family day can make for a memorable and meaningful gift. Being financially responsible and staying within your budget will allow you to build a stable financial future and avoid being trapped in the cycle of debt.


Do you dread the holidays due to the high associated costs? Let us know your thoughts in the comments below!


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