SAN ANTONIO – Holiday spending left many Americans in debt in 2024, with some incurring significant financial burdens.
LendingTree reports that 36% of Americans incurred holiday debt, with the average borrower accumulating $1,181.
The survey, which included 740 U.S. consumers, revealed that 42% of respondents faced interest rates of 20% or higher, intensifying the burden.
Matt Schulz, LendingTree’s chief credit analyst and author of “Ask Questions, Save Money, Make More,” highlighted the financial impact of inflation during the holiday season.
“If you were to just buy exactly the same stuff that you bought last holiday shopping season this year, you were probably going to end up spending more on that,” Schulz said. “That creates some issues for people who are on a tight budget, living paycheck to paycheck.”
Credit cards, buy-now-pay-later options are popular
Most people used credit or store cards to finance their holiday purchases. The LendingTree report found that 65% used traditional credit cards, while 24% relied on store cards. Additionally, buy-now-pay-later services remained a popular option.
Although these payment methods offer convenience, they come with risks. Prolonging repayment can lead to significant financial strain, Schulz warned.
“It’s one thing if you are paying off that holiday debt for a month or two. But if you’re going to five, six months or longer, like a lot of Americans are this holiday season, it’s a significant thing,” Schulz said.
Tips to pay down holiday debt faster
Schulz recommends starting with a budget to understand monthly income and how much can go toward paying off debt. Small sacrifices, such as canceling a streaming subscription or dining out less frequently, can also help.
“Paying down holiday debt really can require some sacrifice depending on the depth of your debt,” he said.
If cutting expenses isn’t enough, Schulz advises considering a second job or a side hustle. Additionally, making more than the minimum payment is crucial for quicker progress.
“Making just minimum payments on holiday debt is definitely not a good idea because it’s a way to guarantee that it’s going to take you a long time and an awful lot of interest to pay down that debt,” Schulz said.
Debt consolidation as a potential solution
For those with high interest rates, debt consolidation can be an effective strategy. Consolidating debt may lower interest rates and simplify financial management, Schulz explained.
“Debt consolidation can be a great way to not only save yourself some money, but also to just streamline your financial management a little bit too,” he said.
Americans are facing higher costs each year, making strategic financial planning essential to mitigate holiday debt’s impact.
