December 27 (UPI) – Holiday shopping, combined with the rising cost of living, has caused consumers to take on most of the debt they have during the holiday season since at least 2015, according to a LendingTree survey.
Since LendingTree began tracking holiday debt data, this year marked the highest average debt with US consumers reporting an average debt of $1,549. This is a 24% increase over 2021 despite 1% fewer people getting into debt.
The survey was conducted online from December 16 to 19, with 2,050 people aged 18 to 76 responding.
About 35% of consumers increased their debt during the holiday shopping season, and a greater proportion of debtors expect it will take at least five months to pay off the new debt. About 37% of debtors responded this way compared to 28% last year.
Sixty-eight percent of people who have increased their debt said they have no intention of doing so at the start of the season, up from 54% in 2021.
“For millions of Americans, it is not possible to regularly pay off their credit cards in full. Life is expensive in 2022 and it won’t be less expensive in 2023,” says the LendingTree report.
“This means that people’s financial leeway is almost zero, so any unexpected expenses can put them in debt whether they want to or not.”
Women made up 68% of consumers who took on unplanned debt, while 67% overall make $35,000 or less annually.
Seven rate hikes by the Federal Reserve this year won’t do borrowers any favors. The average credit card interest rate is over 22%, the highest score since LendingTree began tracking in 2019. With $1,549 in credit card debt and monthly payments of $310 for six months, that would cost to a consumer $195.93 in interest.
Credit cards were the most commonly used instrument for incurring debt, accounting for about 59% of respondents not counting store-issued cards. Short-term or “buy now, pay later” financing plans made up 24%.