A survey conducted this month by WalletHub found that around 25% of Americans are still paying off holiday debt from 2022.
The result, in part, is that one in three Americans are foregoing some gifts this year due to inflation.
Twenty-eight percent of respondents said they would spend less this year than last on holiday shopping, while nearly one in five will apply for a new credit card to help with the shopping.
“If you’re in a hole, stop digging,” Bankrate Senior Industry Analyst Ted Rossman told CNBC.
Rossman explained that a rise in the average credit card interest rate from around 16% in March 2020 to nearly 21% in November has made it more expensive to pay down debt.
“Even a more modest $1,000 balance (from last year’s holiday gifts, perhaps) would keep someone in debt for 40 months and cost them $390 in interest if they only make minimum payments at [the current average rate of] 20.72%,” Rossman said.
To combat debt, Rossman and LendingTree Chief Credit Analyst Matt Schulz recommend that people create a budget, take advantage of credit card awards, and work with family and friends to pull funds together.
“If you go in knowing exactly what you’re looking to get, you may be less likely to succumb to the urge to make those budget-wrecking impulse buys,” Schulz contended.
Other results of the WalletHub survey found that almost half of Americans will not pay for their holiday purchases in full by the due date, and the charitable givings of nearly half will be affected by inflation.
The online survey of nearly 250 respondents was normalized by age, gender, and income so that the sample would reflect U.S. demographics.