Inflation and higher interest rates had consumers regretting some of their holiday purchases, which may take a while to get paid off.
A study by WalletHub showed about three-fourths of respondents felt inflation impacted their holiday spending more than they anticipated. Additionally, more than one-third (38%) expect it will take from three to six months to pay off their holiday shopping debt, and another 13% will need until the end of the year.
“People generally expect to spend a lot during the holidays, but the stakes were higher than normal this year due to inflation and record-high interest rates,” said John Kiernan, WalletHub editor.
“The fact that so many people carry holiday debt well into the new year means the total cost of holiday purchases will continue to grow for months as interest accrues. The average credit card interest rate is currently 22.77% for existing accounts with finance charges, which is a record,” said Kiernan. “It’s in everyone’s best interest to pay off holiday expenses as quickly as possible.”
Consumers were nearly evenly split on whether they overspent, with those saying they didn’t (55%) having a slight edge over the excess spenders (45%).
Most (57%) said it isn’t worth it to go into debt for the holidays, and 28% acknowledged they regretted some holiday purchases.
Family and friends (57%) had the most impact on spending, although discounts (48%) and product reviews (37%) played a role. At 25%, social media was one of the lesser influences.
Looking ahead, 68% of respondents said 2024 will be better for their finances.
“People weren’t so optimistic this time last year,” said Kiernan, “when the Fed was more likely to raise rates than cut them, and we can largely thank cooling inflation and stubbornly low unemployment rates for the change of heart.”
For its survey, WalletHub conducted a national online poll of 230 individuals that was normalized by age, gender and income to reflect U.S. demographics.
See also: Latest 2023 holiday recap shows consumers favored value over luxury