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Dec. 27 (UPI) — Holiday shopping, combined with increased costs of living, caused consumers to take on the most debt they have over the holiday season since at least 2015, a survey by LendingTree says.
Since LendingTree began tracking holiday debt data, this year marked the highest average debt with U.S. consumers compiling an average $1,549 in debt. That is a 24% increase over 2021 despite 1% fewer people taking on debt.
The survey was conducted online Dec. 16-19, with 2,050 people ages 18 to 76 responding.
About 35% of consumers added to their debt burden during the holiday shopping season, and a larger portion of debtors expect it will take at least five months to have their new debt paid off. About 37% of debtors responded this way compared to 28% last year.
Sixty-eight-percent of people who added to their debt said they did not plan to do so coming into the season, versus 54% in 2021.
“For millions of Americans, it’s not possible to pay off their credit cards in full regularly. Life is expensive in 2022, and it isn’t going to get any less so in 2023,” the report from LendingTree said.
“That means that people’s financial wiggle room is almost zero, so any unexpected expense can put them in debt whether they like it or not.”
Women made up 68% of consumers who took on unplanned debt, while 67% overall are making $35,000 or less per year.
Seven Federal Reserve rate hikes this year will not do borrowers any favors. The average credit card interest rate is more than 22%, the highest mark since LendingTree began tracking in 2019. With $1,549 in credit card debt and making $310 payments monthly for six months, this would cost a consumer $195.93 in interest.
Credit cards were the most common tool used to take on debt, accounting for about 59% of respondents not counting store-issued cards. Short-term financing or “buy now, pay later” plans made up 24%.
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