A third of American adults go into debt to pay for holiday shopping
ASMA KHALID, HOST:
'Tis the season for spending and shopping. The holidays might bring joy, but they also bring big credit card bills. Gifts, decorations, entertaining, travel - it all adds up. In fact, about a third of Americans take on debt every year to pay for the holidays. That's according to surveys from the online lending platform called LendingTree. Matt Schulz is chief credit analyst for LendingTree, and he joins us now to talk about this all. Matt, it's great to have you with us.
MATT SCHULZ: Thanks for having me.
KHALID: So the past few years, you all have found that something like 30- to 35% of Americans surveyed take on debt for holiday spending. That means credit cards or, you know, those buy-now, pay-later programs or even, possibly, personal loans. So how much debt are we talking about?
SCHULZ: Well, last year we saw that people took on about $1,500 in debt. And that's the biggest number that we've seen since we started looking at this back in 2015. And that's a lot of money. I mean, that's the kind of thing that may take a little bit of time to pay off. And given how small the average American's financial margin for error is, every extra bit of debt matters.
KHALID: So you're expecting something similar this year?
SCHULZ: I would expect something similar. We saw a pretty good-sized jump from 2021 to 2022. I don't know if we'll see that big of a jump this year, but I think that given inflation sticking around, high interest rates, student loan payments restarting and a bunch of other financial headwinds that people are facing, I think it's reasonable to think that that average debt number would probably go up at least a little bit.
KHALID: So you all take another set of surveys before the shopping season begins where you look at how people are feeling about the holidays financially. This year, about half of Americans say they are, quote, "dreading the holidays." And that stat is even higher for parents with young children. So I will say, Matt, that sounds not exactly like a happy holidays mood that a lot of folks are thinking about heading into the season. What do you make of that?
SCHULZ: Well, it doesn't surprise me, frankly, 'cause the holidays are just an enormously stressful time in about a hundred different ways. And when things are difficult financially, it just makes it even more stressful because any parent can tell you how much pressure they feel to make the holidays perfect, whether it's getting all the family together, buying gifts, traveling so the kids can see grandma and grandpa. Holidays are an expensive time.
KHALID: So it is your job to keep a careful eye on all of this. But I've got a personal question for you. I mean, how is your holiday shopping going right now? Do you create a budget? Do you manage to stick to that budget yourself?
SCHULZ: I probably should stick to a budget, but I generally don't.
KHALID: So what do you advise folks to do?
SCHULZ: Well, it's kind of a do-as-I-say, not-as-I-do kind of thing. I do think that it is still really, really important to try and get the best deals, to shop around, to be cost conscious. And that's true whether you have a higher income or a lower income because just because you have a higher income doesn't mean that you will avoid having debt. In fact, folks with higher incomes are able to get more credit. And the more credit you have, the more debt you can run up. So...
KHALID: We hear about how important consumer spending is for the health of the broader American economy. So, you know, if people spend less money, whether that's shopping or traveling this December, I mean, does that not sort of hurt the broader economy? Does our economy sort of depend on people going into debt?
SCHULZ: Well, the - our economy certainly depends on people spending. Basically, the default state in this country is credit card debt. In a way, that debt is a good thing for the economy because that debt goes into businesses' bottom line and turns into jobs and that sort of thing. But it doesn't mean that the debt problem isn't a real issue for a lot of people in this country, and continues to get worse.
KHALID: Matt, thanks so much for speaking with us.
SCHULZ: Thank you.
KHALID: Matt Shultz is chief credit analyst for LendingTree.
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