1 in 3 Americans just racked up more than $1,200 in holiday debt

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‘Tis the season to rack up a huge tab.

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More than a third of US shoppers (36%) took out vacation loans this year, and they averaged $1,249 after paying off financing later, either after shopping on their credit cards, taking out a personal loan, or using Buy Now. is owed.

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This is according to LendingTree, which surveyed more than 2,000 US consumers between December 14-20, 2021 for its annual holiday credit report. Result: More people took out holiday loans this year than in 2020, when 31% were in the red in the new year.

There’s a silver lining: The average loan amount for 2021 is down 10% from last season’s $1,381 – possibly because those financially hurt by the COVID-19 pandemic may not feel as comfortable borrowing as they have in the past. I would have

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People were drawn to big holiday bills, according to a previous Lending Tree survey, which found that nearly half of surveyed consumers (48%) “fear” the holidays because of the cost of decking the halls, buying gifts, and hosting family feasts. “Were were And 41% of those surveyed expected to go into a purchase loan, especially since 13% of respondents were still paying The last Year holiday tab.

In fact, the National Retail Federation reported that Buyers can expect to spend an average of $998 for the winter vacation This year – including Hanukkah, Christmas and Kwanzaa – on items like gifts, food and decorations. This was equal to last year’s vacation expenses.

LendingTree also looked at which Americans took on the most debt this year, as well as where they added it.

It should come as no surprise that parents with children under the age of 18 were most likely to take out a vacation loan. More than half (54%) reported doing so. “The pressure on parents from children, friends, relatives and society to give up until the holidays hurt is very real,” Matt Schulz, chief credit analyst at LendingTree, said in a statement.

And 50% of millennials (defined in this report as ages 25 to 40) said they earned more debt this December. Schultz suggests that it may come down to many millennials living paycheck to paycheck as they pay off student loans and try to save for financial milestones, such as buying a home. “Millennials are no longer college kids,” he said. “Many people are getting married and starting families, and those things are really expensive. When you take inflation into account, it’s an even bigger issue.”

Both millennials and parents with children under 18 borrowed an average of $1,462 for the holidays, or $213 more than the average debt taken by respondents overall.

Credit cards are the most popular form of holiday debt, with 62% of borrowers making their purchases on plastic, not including store credit cards.

Americans were racking up credit card debt again this year, even before the holidays, according to the New York Federal Reserve’s third-quarter report on home debt and debt. It found that household debt grew by $286 billion in the third quarter to $15.24 trillion overall. The biggest contributor was the boom in mortgage balances, as record-high home prices forced borrowers to take out larger mortgages – in turn, perhaps, with more Americans “leaning” on their credit cards to pay off other bills after their mortgages. Took a big cut from his paycheck.

But Buy Now, Pay Later (BNPL) programs such as Afterpay APT,
– which has recently been agreed to be acquired by Square SQ,
– Confirm AFRM,
And Klarna has also become more and more popular. Nearly 40% of people surveyed by LendingTree used BNPL to pay for their gifts and trimmings this year, up from 37% last year.

Buy now, pay later Ripple: Afterpay, Klarna, Confirm and Rivals are expected to take the US by storm

Roughly 60% of US adults have used BNPL services, according to Marketing Insights Agency C+R Research, and four out of five of those using BNPL recently reported morning consultation That they planned to use it for holiday gift-buying.

“They’re easy to obtain, give you a little extra time to pay at no extra cost, are predictable and don’t leave you with a lot of extra credit in the end that could become debt in the future,” Schultz told BNPL Appeal. Said about.

But let’s be clear: BNPL is still debt, and financial experts warn that it’s possible for buyers to get in over its head without realizing it. So here are some things to keep in mind before using Buy Now, Pay Later services, as well as tips for using them responsibly.

So what if your debt spiked this holiday season, and you don’t want that balance hanging over your head six months into the new year?

Some tried-and-true tips from personal finance experts include deciding on a plan of attack to pay off that debt and keep you focused. Some strategies include the snowball method (paying off the smallest debt first and working your way up to the largest ones), or the avalanche method (paying off the loan with the highest interest rate first, and then tackling the next highest, and so forth). . .) Many experts suggest paying off the cards with higher rates first to avoid large interest payments down the line, although choosing to eliminate the lowest debt first can give you a psychological boost that can help your loan repayment. Feels more doable.

Read more: See How This 24-Year-Old Paid Off $20K in Credit Card Debt in Less Than a Year

Moving into a higher paying job or increasing your income from a side hustle can also provide more money to pay off that debt faster.

You can get tips on transferring your balance to a credit card with a lower interest rate here.

Or sign up for Personal Finance Daily to receive more personal finance advice, as well as insight into what the top news stories mean for your wallet each day.


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