How to Avoid Overspending This Holiday Season and Still Have a Happy Ending
For some shoppers, the upcoming holiday season may lead to significant credit card debt. Meanwhile, some people are still paying off debt from last year’s gift buying.
The State of Credit Card Debt
According to a recent holiday spending report by NerdWallet, 28% of shoppers who used credit cards have not paid off the presents they purchased for family and friends last year. With credit card debt already at $1.14 trillion, the stakes are higher in 2024.
The Rise of Holiday Spending
This year, spending between Nov. 1 and Dec. 31 is expected to increase again to a record total of $979.5 billion to $989 billion, according to the National Retail Federation. Shoppers may spend $1,778 on average, up 8% compared to last year, Deloitte’s holiday retail survey found. Most will lean on plastic: About three-quarters, 74%, of consumers plan to use credit cards to make their purchases, according to NerdWallet.
How to Avoid Overspending
"Somehow it’s been programmed into the American consumer, that essentially says ‘I have to spend a lot of money on people I care about,’" said Howard Dvorkin, a certified public accountant and the chairman of Debt.com. It doesn’t have to be that way, he said.
Tips to Avoid Overspending
- Set a budget and track expenses
- Reallocate funds from other areas, such as canceling unwanted subscriptions or negotiating down utility costs, to help make room for holiday spending
- Start holiday shopping early to take advantage of early deals and discounts
- Consider pooling funds among family or friends to share the cost of holiday gifts
How to Save on What You Spend
- Start your holiday shopping early to take advantage of early deals and discounts
- Try pooling funds among family or friends to share the cost of holiday gifts
- Avoid impulse purchases by curbing temptation
- Consider an investment, such as individual stocks or bonds, or a charitable donation instead of gifts
Conclusion
The key to avoiding overspending is to set a budget, track expenses, and prioritize what’s truly important. By making a few simple changes, you can have a happy and fulfilling holiday season without breaking the bank.
FAQs
Q: How much is the average holiday spending expected to be this year?
A: The average spending is expected to be around $1,778, up 8% compared to last year.
Q: What percentage of consumers plan to use credit cards to make their holiday purchases?
A: About three-quarters, 74%, of consumers plan to use credit cards to make their purchases.
Q: What is the average credit card interest rate?
A: The average credit card charges more than 20% interest, near an all-time high.
