With Thanksgiving over and Christmas just around the corner, it’s time for many Americans to start thinking about holiday shopping. The holidays are a time to gather with friends and family and enjoy great food, relax by the fire, and hopefully exchange a few gifts.
What Do the Statistics Say?
Unfortunately for many Americans, the gifts purchased for their loved ones will put them in debt to the tune of about a thousand dollars on average. Around 75% of American shoppers will use credit cards to pay for some portion of their holiday spending. To make matters more challenging, about 15% of consumers are still paying off the debt that they accrued from last year’s holiday season.
While over half of consumers indicated that they plan on spending less during this year’s season, it may be difficult to follow through with that plan once faced with the pressure of pleasing their friends and family, particularly their children. In fact, shoppers with children under the age of eighteen have a higher chance of using credit cards during the holidays when compared to shoppers without a child under eighteen. They are also more likely to still be in debt from the 2017 holiday season.
Pitfall of Taking On Credit Card Debt
The biggest concern with taking on debt during the holidays has to do with the interest rate associated with most credit cards. According to an analysis from last year’s holiday spending, the average interest rate on credit card debt is 15.9%.
If the average shopper spends $1,000 (around the estimated average during the holidays) and makes only a minimum monthly payment of $25, the balance would not be paid until 2023, and the accrued interest fees would total almost $500. The appeal of only paying $25 per month doesn’t seem like such a good idea once the time and interest rate is calculated, yet consumers continue to make only minimum payments in exchange for being able to keep up with necessary expenses like rent, utilities, and groceries.
In fact, the tactic of postponing credit card payments in favor of other expenses led to a record-setting month in August of this year, with the outstanding credit card debt totaling over $1.041 trillion, one of the highest amounts since the recession started in 2008.
Let Us Help You With Your Holiday Finances
While the holidays are usually a time of joy and celebration, the after-effects can take a toll on the average American. If you are having trouble keeping up with your credit card debt, please contact one of our locations nearest you in Alabama, Mississippi or Tennessee for a free, confidential consultation with one of our experienced, licensed attorneys.