With the holidays just days away, consumers are turning to credit to support their spending. Unlike other forms of payment, credit cards enables holiday shoppers to ease the financial burden, spreading out payments over several months.
Relying on credit, however, can also lead consumers into debt—particularly if they’re unable to pay off their payments in the subsequent months. According to data from Achieve, 50% of American consumers expect to incur debt because of their holiday spending. Of that group, 37% said that it will take them two or more months to pay off the debt, while fewer (14%) said it would take them a month to pay off their balances.
With credit card interest rates at a record high, consumers could be on the hook for paying more due to carrying a balance on the card, in addition to compounding interest.
“For online holiday shopping, consumers should use digital payment options that offer cash back or other rewards to maximize the value of their spend,” Achieve Co-Founder and Co-CEO Andrew Housser said in a prepared statement. “But it’s important to be mindful about how much you’re spending online because it’s easy to quickly click away large sums of money without even thinking about it.”
Holiday Spending Has Been Robust this Year
Consumers have become more strategic in their holiday spending this year, opting for deals and promotions. Retailers have taken note, and in an effort to drive up sales, they rolled out holiday sales and discounts earlier this year. In fact, many began promoting deals as early as October, well before popular shopping days Black Friday and Cyber Monday.
These efforts paid off as Thanksgiving and Black Friday sales came in strong. Adobe’s Holiday Shopping Report’s data revealed that Thanksgiving sales topped $5.6 billion and Black Friday spending reached $9.8 billion. Consumers’ penchant for leveraging buy now, pay later platforms helped the strong retail performance.
