The amount of money Americans plan to allocate for the holidays this year is on track to surpass pre-pandemic levels for the first time. In 2023, holiday spending is expected to grow between 3% and 4% over 2022 volumes, to between $957.3 billion and $966.6 billion, according to the National Retail Federation (NRF).
Most Americans (80%) are prepared to dish out up to $1,000 this holiday season, according to a recent Bank of America survey. Roughly 43% of respondents planned to spend less this year and 57% said they would limit expenditures to the same or more, with 9% planning a significantly bigger splurge this year. Millennials were three times more likely to spend big compared to other generations, the survey said.
Despite budgeting for healthy holiday spending, 70% said they did not expect to take on any debt to purchase holiday gifts.
If you’re planning to borrow money to finance holiday shopping, you may want to consider a 0% APR credit card or a personal loan for larger purchases. You can visit Credible to compare multiple rates and lenders for free, all in one place.
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Americans kick off 2023 season with record debt
Record high credit card debt has shoppers stressing about financing holiday purchases, according to a survey by D.A. Davidson & Co. Of the roughly 75% of Americans who plan to celebrate the 2023 holidays, 71% said they are worried about their expected spending this upcoming holiday season.
Some 40% said they had a higher credit card balance than last year, and 54% said they don’t typically pay their credit card balances off in full every month, according to the survey. Collectively, Americans now owe $1.08 trillion on their credit cards after racking up $48 billion in new spending during the third quarter of 2023, according to a recent report on household debt from the Federal Reserve Bank of New York.
“As credit card balances grow during this period of sustained inflation, many Americans are understandably worried about their financial picture, especially as we approach a period of increased spending,” D.A. Davidson Vice Chairman of Wealth Management Andrew Crowell said.
Keep reading to learn about how you can budget for holiday spending. If you’re interested in financing options for larger purchases, you can visit Credible to compare interest rates on various financial products without impacting your credit score.
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How to manage holiday spending
One way consumers can stay on track financially this holiday is by budgeting. One-third of Americans (35%) said they had already budgeted for holiday spending. Another 36% said they planned to create a spending plan, according to the D.A. Davidson survey.
Beyond budgeting, Americans said they were also taking steps to cut back on spending this holiday season. Here are some other ways consumers can save on their monthly spending:
Be honest with yourself – and others
Set realistic expectations for what you can spend and communicate with your loved ones about your holiday plans. Roughly 64% of survey respondents planned to discuss holiday spending with their significant other.
If you are having difficulties planning or creating a budget, a financial advisor could be a great resource – and accountability partner – to have on your side, according to Kelly Jones, Financial Advisor at Thrivent.
“They can look at your overall financial picture and help you develop a budget that makes sense for your situation,” Jones said. “Personalized advice can help you navigate holiday expenses, ensuring your spending doesn’t derail your short- and long-term financial goals.”
Another way consumers can get in front of holiday spending is by taking advantage of free mobile apps, digital tools and online resources to track their spending, Jones said. Knowing how they spend their money can help them create a holiday budget that makes sense.
If you’re struggling with making your monthly payments and managing your budget, you could consider paying off high-interest debt such as credit cards with a personal loan. Visit Credible to speak with a personal loan expert and get your questions answered.
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