(NewsNation) — Americans anticipate spending billions this year on holiday expenses yet don’t necessarily have the funds to pay for it all upfront and rely on credit cards to cover costs.
Shoppers anticipate spending $201 billion on holiday gifts and nearly $300 billion on travel this year, about $46 billion more than in 2023, a new NerdWallet survey found.
Plus, several survey participants reported they were still in debt from the previous holiday season.
Nearly 3 in 10 survey participants said they used credit cards to pay for holiday gifts last year and still haven’t paid off their outstanding balances. Plus, 10% of shoppers said they’d even cut into emergency savings to cover costs of holiday expenses rather than not.
This year, 74% of shoppers told NerdWallet they planned on using their credit cards this holiday season.
Think before you swipe
Holiday spending stresses out more than half of holiday shoppers, the survey found. Plus, 32% of survey participants said they feel it’s essential to get gifts for their loved ones in order to show their love.
“While celebrating the season is a top priority for many Americans, going overboard can cause stress for months afterward, so it’s worth planning ahead to reduce costs where possible,” NerdWallet personal finance expert Kimberly Palmer said.
Before deciding to swipe the credit card, take time to understand payment options. The best way to avoid additional holiday debt is to pay with cash, NerdWallet reported. By paying with cash, Americans avoid any late fees and accrued interest.
Credit cards can ultimately be a pricey way to pay for a gift.
Another tip financial experts shared with NerdWallet is to “resist the pressure” to buy things right away, especially when retailers advertise sales or discounts. Company advertisements are meant to pressure consumers into purchasing their products “now” for fear it will either sell out or ultimately cost more.
How to avoid adding to the stress
There are several ways that consumers can alter their approach to the holiday season to avoid making it more stressful. Palmers suggested that taking time to compare prices and using savings instead of adding to financial debt are two ways to take control of holiday spending.
Creating a holiday shopping plan is another way to help avoid adding stress. Start early by making lists and prioritizing spending based on what is necessary and what is optional or would be a luxury spend. Making a list of what you are expected to spend on will help set up a budget based on need.
Plus, knowing ahead of time opens up the opportunity to spread out spending throughout November and December rather than spending large sums of money within a short time.
Ahead of the holiday, another tip would be to set money aside and start saving a little at a time, specifically for holiday spending.
“Setting aside savings for holiday expenses as early as possible in the year can make it easier to build up more of a cushion before these seasonal expenses hit. Estimating the total amount you plan to spend and then sticking to it as you shop and plan travel can also help avoid surprises later,” Palmer told NerdWallet.
Setting a couple of bucks aside every week or daily can eventually add up and assist during the holiday season.
Remaining debt weighing you down?
As mentioned above, about 3 in 10 Americans said they still have debt from the last holiday season that they are working to pay off.
So, what can you do if you still have debt from last year?
Palmer suggested working to pay it off as soon as you possibly can.
“If you still have debt from last year’s holiday season, make a plan to pay it off as soon as possible. And think about how much you can reasonably spend on 2024 holiday shopping without carrying a credit card balance into the new year,” Palmer continued.
Setting a realistic budget for the upcoming holiday season that makes sense with additional credit card payments is important. Don’t spend money you don’t have.
It’s also OK to set boundaries with loved ones and set expectations ahead of the holidays. At least 22% of shoppers said they have already discussed or plan to discuss limiting holiday gifting this year with their family and friends, NerdWallet reported.
Plus, about a third of survey participants said they’d rather have an experience or spend time with family or friends than exchange gifts.