In many ways, 2021 has seen a record-breaking holiday period despite lingering supply chain issues, inflation and a new variant of Covid-19.
Holiday sales set to grow up to 11.5% into 2020, according to a projection from the National Retail Federation.
About 30% of Americans said they outmoded during giveaway season, according to a post-holiday survey by WalletHub. Although omicron has caused a new wave of infections, more than half, or 56%, said Covid had not affected their plans, according to the survey.
For most buyers, increasing their spending also meant relying more on credit cards or buying now, paying financing later to spread spending.
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As a result, around 36% of consumers are in debt, due to an average of $ 1,249, according to a separate survey from LendingTree.
Buy Now, Pay Later has exploded in popularity with the increase in online shopping during the pandemic; However, studies show that installment buying may cause consumers to spend more than they can afford.
While these programs allow buyers to split their purchases into equal, often interest-free payments, there may be late fees, deferred interest, or other penalties if you miss a payment.
Credit cards, on the other hand, are one of the most expensive means of borrowing, with interest rates over 16% on average. If you have bad credit, you’ll pay even more: About a quarter of borrowers have an APR between 20% and 29%, according to LendingTree, while 9% have an APR above 30%.
Usually, card balances decline at the start of the year when borrowers pay off their vacation purchases.
However, at the dawn of 2022, credit card balances are expected to increase further as consumers continue to increase their spending, according to a separate forecast from TransUnion.
This year, paying down debt will be a challenge, most consumers said. In fact, 82% of those with vacation debt won’t pay it off within a month, LendingTree found, despite very high interest charges.