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Only Half Of US Credit Card Customers Believe They Can Pay Off Their Holiday Bills

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According to the LendingTree Credit Card Confidence Index, a monthly survey published since 2018, only half of America’s credit card customers believe they’ll be able to pay off their December balance in full as we come out of the holiday season. 

The nationally representative survey received data from 1,514 cardholders, with only 51% stating they could pay off their December card balance this month; a 7% drop from the previous month. 

The current national credit card balance stands at $1.08 trillion which is a record high, and the average interest rate has reached 21%. This is the highest point recorded by the Federal Reserve in about 30 years of tracking, according to reports from USA Today. 

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“It was hard to imagine that growing debt, rising inflation and sky-high interest rates weren’t eventually going to take a toll,” said Matt Schulz, LendingTree’s chief credit analyst. 

In another periodic survey by Bankrate, it was shown that 47% of cardholders carried debt from month-to-month in mid-2023, which is up from 39% at the end of 2021. According to a TransUnion report for the third quarter of 2023, the average credit card holder has about $6,088 in debt. 

USA Today also reported that Wells Fargo Economics found that credit card debt is rising faster than any other household debt. 

“I think all this adds up to more people carrying more debt for longer periods of time, and unfortunately, I don’t see any of that reversing any time soon,” said Ted Rossman, a senior industry analyst at Bankrate.

The LendingTree index also showed that only 40% of women expressed confidence in their ability to pay off their card balance, compared to 64% of men. Across the five years of this specific survey, women have always voiced less confidence. 

Schulz theorized that “women may take a little bit more conservative approach to their finances. Men may be a little more confident than they should be, while women may be a little bit less confident than they could be.”

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Catherine Valega is a certified financial planner located in Boston who specializes in the finances of women. She offered the opinion to USA Today that female consumers may feel extra stretched out financially during the holidays due to the traditional roles that women filled in the household throughout history. That pressure is still very much present today, and has been passed down from generation to generation. 

“Women tend to want to give gifts, and they also tend to manage the stuff in their households. Who doesn’t spend more at year end,” Valega stated. 

Bankrate’s Rossman suggested that individuals with debt on a high-interest card should consider transferring some or all of their balance to a zero-APR card. Those cards typically give holders 15 months or longer of zero interest rates on their payments.

“If you use one of these properly, you can save a ton of money on interest,” Rossman said.

Valega stated: “Cardholders can also benefit from a few simple rules in using their cards. One is to charge only as much as you can afford to repay that month. Another is to set up automatic payments on the card. Better still if you can select the option to auto-pay the entire balance at month’s end.”

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Is A Decrease In Halloween Spending Threatening The Economy?

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Halloween is one of the many holidays that contribute to America’s consumer-driven economy. This year, retailers are worried, as it’s projected that by the end of the week Americans would have spent a total of $8.8 billion collectively this Halloween season, according to The Hill Magazine. While that figure is huge, it’s a decline from the past two years income of $9.2 billion for both 2017 and 2018. Retail experts aren’t considering this to be a “decline” but it is definitely way less than what the industry has seen come in throughout the past decade. 

According to John Leer, an analyst at Morning Consult, “the trend for consumer sentiment over the past year has been clear. We recently launched a daily consumer sentiment index that tracks how consumers feel about the current economy and their expectations of where the economy is headed. For all these consumer indexes, we see that they are considerably lower than they were at this time last year.” 

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Consumer sentiment is basically a fancy term for how average consumers think the economy is functioning based on their own experience and financial situation. A drop in sentiment means that consumers are more likely to spend way less than they normally would, especially around the holidays. Consumers are more likely going to turn to online retailers and alternative cheaper options, which isn’t a bad thing for them, however, for the economy it could be detrimental. 

According to The Hill, consumer spending accounts for around 70% of the US economy, which is why the industry is worried about the decrease in sentiment. In the past, there has been a steady increase in sentiment and spending around the holiday season. This increase has indicated to the government that consumers have a lot more disposable income to spend on holiday products that they’ll really only need for one day of the year, depending on the holiday in this case Halloween. 

“An increase indicates that we are simply much wealthier than we used to be, and we spend a significantly smaller percentage of our income on food, clothing and shelter than did our parents or grandparents. This leaves us much more to spend not just on the new gadgets they didn’t have but everything from Halloween to Valentine’s Day to bar mitzvahs, birthdays and barbecues,” said Steve Horwitz, an economics professor at Ball State University.

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However, when there’s a decrease in holiday spending, it can be an indication for how much disposable income the average American is willing to spend/has in general. Especially around Halloween, a holiday that is built around flashy expenses. Family oriented homes are more likely to want to spend more as a means of fitting in with the rest of the neighborhood, and giving their child the best and spookiest experience they can while they’re still kids. At the same time, needless decorative expenses that a household will only get use out of for one week of the year is typically the first thing to go when a family needs to make some budget cuts. 

It’s the same with Christmas and the holidays in general. Added expenses can be expected to decrease as the focus shifts to gifts and food purchases, and any other big ticket holiday need. With Halloween, the focus becomes the costume and candy purchases, both of which seem to receive an increase in price when October rolls around. 

Luckily, November and December is right around the corner, and any decrease in economic growth that occurred within the past month is expected to be made up for and then some for the holidays. The National Retail Federation forecasts that holiday winter sales can hit up to $730 billion, about a 4% increase over last year, according to the Hill. 

“There are enough signs of toil and trouble that could spook markets and send a chill through the economy. I wouldn’t put it ‘the world is falling apart’ phase yet. But the trend that we see is really concerning, and it’s consistent among all demographic groups,” said Mary McGinty, a spokeswoman for the National Retail Federation.