“Nearly half of US shoppers met Black Friday with last year’s holiday debt – survey Nearly half of American consumers still have debt from last year’s holiday season. The average credit card holder owes $7,236, and total card debt has reached a record $1.17 trillion.”, — write on: unn.ua
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In one holiday shopping survey, personal finance site WalletHub found that 47% of consumers still carry debt from last holiday season.
In another survey, NerdWallet found that 28% of consumers who used cards to purchase gifts in 2023 did not pay off their balances.
A third survey by Intuit Credit Karma found that a third of consumers enter the holidays with at least $5,000 in debt.
“Americans are entering the holiday season with losses,” said Emily Childers, consumer credit financial expert at Credit Karma.
Credit cards in the country look bleak. Half of all cardholders have month-to-month debt as of mid-2024, the highest since early 2020.
According to LendingTree, the total card balance in the country is a record $1.17 trillion. The average cardholder with debt owed $7,236. The delinquency rate is increasing.
To make matters worse, credit card interest rates are higher than ever. The average rate on the card is 20.42%, according to Bankrate. This is a hair below the record value of 20.79% set in August.
Retail credit cards, popular during the holiday season, have even higher rates. The average rate on store cards reached 30.45% this year, a record, according to Bankrate.
“This is definitely not the holiday season when you want to borrow,” said Melissa Lambarena, NerdWallet’s personal finance expert.
Americans are clearly concerned about holiday debt. Most consumers feel stressed about holiday spending, according to an Experian survey. Almost two-thirds of shoppers admit to spending too much.
However, many consumers plan to continue spending and borrowing during the holiday shopping season.
In NerdWallet’s holiday survey, three-quarters of consumers said they plan to put gifts on credit cards rather than pay with cash.
In a WalletHub survey, 52% of shoppers said they plan to apply for a new card for holiday shopping.
Debt.com’s holiday survey found that 66% of holiday shoppers plan to take out a loan.
“Americans are feeling tight this holiday season, and it’s not just inflation,” said Howard Dworkin, chairman of Debt.com. Dworkin said his company has surveyed consumers about debt in past years, and the share of those planning to take out a loan for the holidays “used to be below 50%.”
Buyers may also spend more time paying off their debts. WalletHub conducts an annual survey of shoppers during the holiday season. In 2022 and 2023, about a quarter of consumers said they were still paying off debt from the previous holiday season. In 2024, this share will increase to 47%.
“So we’re talking about double the amount,” said Chip Lupo, author and analyst at WalletHub.
Some cardholders simply stop making payments on their holiday debt. The national delinquency rate is more than 3%, the highest rate in more than a decade, according to federal data.
Most often, consumers only make minimum payments on their cards. If you’re making the minimum payment, you’re probably paying off the debt very slowly.
“And it’s not going to do anything but make it more expensive,” Lupo said.
Bankrate calculated that if you start with $1,000 in card debt at 17% APR and pay the minimum, you’ll still owe $886 after 12 months.
Many consumers try to get around high interest rates with deferred interest stocks. In a typical scenario, a customer makes a large purchase on a store card and then has six or 12 months to pay it off without any interest.
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