Americans set new spending records this holiday season, but the celebration comes with a hefty price tag as credit card debt soars to unprecedented levels.
Without the credit cards, there’s no way Americans could have afforded it.
At a Glance
- Holiday spending reached a record-breaking $989 billion in 2024
- Over one-third of Americans incurred debt, averaging $1,181 per person
- Credit card interest rates remain above 20%, raising concerns about long-term financial strain
- Millennials are increasingly relying on credit cards amid rising living costs
- Experts warn of potential financial insecurity due to high-interest debt
Record-Breaking Holiday Spending
The 2024 holiday season saw Americans opening their wallets wider than ever before, with the National Retail Federation (NRF) reporting a staggering $989 billion in total spending. This unprecedented surge in consumer activity was fueled by a combination of factors, including wage growth, strong employment figures, and a desire to maintain holiday traditions despite economic pressures.
“Job and wage gains, modest inflation and a healthy balance sheet have led to solid holiday spending,” National Retail Federation’s Chief Economist, Jack Kleinhenz said.
Credit card debt set to hit record levels as consumer holiday spending rises https://t.co/OSiiEH96oZ
— CNBC (@CNBC) December 27, 2024
The Dark Side of Festive Cheer
While retailers celebrate record sales, millions of Americans are facing a financial hangover. Over one-third of consumers incurred debt during the holiday season, with the average balance reaching $1,181 – a significant increase from $1,028 in 2023. This surge in borrowing comes at a time when credit card interest rates remain stubbornly above 20%, creating a perfect storm for potential long-term financial strain.
The reliance on credit cards for holiday purchases is particularly concerning given that 28% of consumers had not fully paid off debt from the previous year’s festivities. With 21% of those in holiday debt expecting to take five months or longer to clear their balances, the compounding effect of high-interest rates could lead to a cycle of financial struggle.
Among those most affected by the holiday spending spree are millennials, who are increasingly turning to credit cards amid a cost-of-living crisis. This generation, already burdened by student loans and rising housing costs, now faces the additional challenge of managing holiday-induced debt.
The consequences of this debt burden extend far beyond the holiday season. As Matt Schulz pointed out, “High-interest debt means less money to put towards building an emergency fund, saving for college, or even covering basic expenses. In extreme cases, it can lead to financial insecurity.”
We’re sleepwalking into a debt crisis on Joe Biden’s watch.
