Personal Finance

Survey: 36% of Americans Took on Debt from Holiday Season

As we count down the final hours of 2021, it looks as though a number of consumers will be carrying some new debt into 2022. According to a survey by LendingTree, 36% of Americans came away from the holiday shopping season with debt. However, in some good news, the average amount of that debt decreased from last year. In 2021, the average incurred debt load came in at $1,249 compared to $1,381 in 2020. What’s more, the figure is also down from pre-pandemic 2019’s $1,325 and is only a bit above 2018’s $1,230 average. Notably, this 10% decrease was also the first year-over-year drop that the survey has observed since it began in 2015.

Looking closer at the data, Millennials were not only more likely than other generations to have taken on debt this holiday season but also saw a higher average amount. Half of the Millennial respondents said they took on debt, with the average amount coming to $1,444. That’s compared to just 16% of Baby Boomers who reported taking on holiday debt, which averaged $1,078. Meanwhile, at $821, Gen Zers surveyed had the lowest average debt load.

Unfortunately, the vast majority (82%) of those surveyed stated they aren’t likely to pay off their holiday purchases within the next month. As for what will become of the newly-accrued debt, 45% of respondents said they planned to try to consolidate their debt or open a balance transfer credit card in the new year.

Offering advice on paying down holiday debt, LendingTree’s Matt Schulz said, “You can’t make a meaningful plan to tackle debt unless you know exactly how much money is coming in and going out of your household on a regular basis. Once you know that, you can take stock in your spending and shift things around to match your priorities, including freeing up money to pay down debt.”

Elsewhere, as expected, the use of “buy now, pay later” (BNPL) services was on the rise in 2021. In total, 40% of LendingTree survey respondents reported using BNPL platforms to pay for holiday gifts this year. That’s up from 37% last year. Interestingly, the survey also found that 61% of six-figure earners utilized BNPL this year. Once again, Millennials also over-indexed, with 60% of respondents of that generation noting use of buy now, pay later in 2021.

In a perfect world, it would be great to see a holiday season that didn’t result in debt. Yet, all things considered, it’s encouraging enough to see that this year’s average fell — breaking a long-standing trend observed by LendingTree. Furthermore, it sounds as though a number of survey respondents already have a plan in place for managing their debt in the new year and reducing its impact on their finances. Hopefully these plans pay off (no pun intended), helping to lead to a prosperous 2022.