Many shoppers want to make the holidays memorable for friends and family, but doing so can come at a steep cost.
According to data from U.S. News, around a quarter of consumers are still paying off credit card balances from last year’s holiday season. The survey also found that roughly 62% of respondents have carried holiday-related credit card debt into the spring or summer at least once.
And the financial pressure isn’t letting up. This holiday season, more than a quarter of consumers expect to carry a credit card balance past its due date. That comes as U.S. credit card debt has already reached a record $1.28 billion, while inflation continues to put pressure on household budgets, driving up the cost of everyday essentials such as gas and groceries.
Holidays Now, Pay Later
With budgets stretched, consumers are increasingly turning to borrowing to cover both everday expenses and holiday purchases. Credit cards remain a popular option, but buy now, pay later (BNPL) loans are also becoming part of the equation.
Although some consumers view installment loans as an alternative to credit cards, BNPL still carries financial obligations that can add to household strain. That’s particularly concerning as more shoppers turn to these services to cover essential expenses.
Holiday shopping is another area where BNPL is gaining traction. Last year, consumers used these loans to finance $20 billion in online purchases during the holiday season, according to Adobe. The trend is expected to continue, with Adobe forecasting that BNPL will drive more than $21 billion in holiday spending this year, up 6.6% year-over-year.
Holding on to Tradition
Even with mounting debt and economic uncertainty, consumers aren’t necessarily willing to scale back their holiday celebrations. Adobe, for instance, expects overall U.S. e-commerce sales to reach roughly $275 billion this holiday season, suggesting that spending will remain strong despite the financial pressures facing households.
That doesn’t mean consumers are shopping the same way they used to. Instead, many are finding ways to stretch their budgets by shopping earlier, redeeming loyalty points, and taking advantage of promotional events and discounts. Some are even embracing the challenge of making the most of a smaller holiday budget.
Ultimately, consumers may be becoming more strategic about how they spend, but that doesn’t mean they’re spending less. With the cost of everyday expenses still high, some will continue to rely on credit cards and BNPL loans to make the holidays happen—potentially carrying those financial obligations well into the new year.
