Nearly half of Americans expect to go into debt buying holiday gifts: survey

Many Americans expect to come out of this holiday season with more debt as inflation continues to rise. In fact, nearly 42% of shoppers expect to go into debt paying for holiday gifts and travel this year, according to a recent survey by U.S. News & World Report. 

The survey also found that 19.6% of respondents expect to carry a balance on a credit card in order to finance the holidays. On the other hand, 13.4% say they may utilize a buy now, pay later plan. And 8.7% suspect they will carry a balance on these types of plans. 

"The results aren't surprising since two-thirds of respondents report they are at least a little concerned about having enough money to pay for the holidays this year," U.S. News & World Report said in its survey. "And 31.2% say they expect to spend more this year due to high prices."

But carrying over balances and taking on debt can be particularly burdensome in a high interest rate environment. The Federal Reserve has raised interest rates six times so far this year in an effort to lower inflation. The last interest rate spike put the federal funds rate at a range of 3.75% to 4%, or the highest it has been since the 2008 financial crisis. And while Federal Reserve Chairman Jerome Powell said the Fed will slow down the pace of rate hikes, any spike to the federal funds rate can impact rates on consumer products like credit cards. 

Still, the interest rate gap between credit cards and personal loans remains historically high. The average interest rate on credit cards was 16.27% as of August. On the other hand, the average interest rate on personal loans was 10.16%, according to the latest data by the Federal Reserve Bank of St. Louis.  

If you’re struggling with high-interest debt, you can consider paying it down with a personal loan at a lower interest rate. Visit Credible to compare loans from multiple lenders and find your personalized rate. 

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Americans are taking on more debt 

Total household debt reached $16.51 trillion in the third quarter of 2022, according to the New York Fed's latest Household Debt and Credit report. That marks an increase of $351 billion year-over-year. 

A separate analysis by VantageScore found that consumers in October averaged $5,600 in credit card balances, up 0.8% month-over-month. The firm noted that "rising interest rates and prices combined with strong consumer demand contributed to the rising balances."

If you’re having trouble paying off high-interest credit card debt, consider consolidating it into a personal loan at a lower rate and lower your monthly payments. You can visit Credible to compare loans from different lenders at once without affecting your credit score.

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How to pay off high-interest holiday debt quickly 

Despite the deals that come with shopping holidays like Black Friday and Cyber Monday, holiday shopping is expected to surpass $1 trillion, according to a recent forecast by Insider Intelligence and eMarketer.

However, there are plenty of ways to pay down debt amassed during the holiday season. 

Sign up for a balance transfer card 

Balance transfer cards allow people to pay down credit card debt transferred over at 0% APR for an introductory period, which can last as long as 18 months. But borrowers need to be careful to pay off the transferred debt within that time period. Afterward, the balance transfer card can pick up an APR similar to a traditional credit card. Additionally, interest will accrue on any new balances put on this card. 

You can visit Credible to compare different balance transfer cards from multiple credit card companies at once and find one that’s right for you. 

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Take out a personal loan

Personal loans can help borrowers consolidate their high-interest debt into one loan with a lower interest rate and potentially lower monthly payments. Each personal loan has its own terms like maturity date or the time borrowers have to pay it off. 

But borrowers should be careful to consider all the loan’s terms as some may have prepayment penalties, which means loan holders can face fees if they pay off the loan before the maturity date. If you’re interested in taking out a personal loan, you can visit Credible to speak with a personal loan expert and compare your options.

Take out a cash-out mortgage refinance 

Home prices in October were up 5% year-over-year, according to the latest housing market overview by Redfin. Homeowners can take advantage of this by pulling money out of their home through a cash-out refinance to pay off high-interest debt. Visit Credible to find your personalized interest rate without affecting your credit score.

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