The pursuit of a perfect commercial Thanksgiving, Christmas, and New Year’s counts as one of the many reasons why consumers feel pressure to use their credit cards to spend beyond their means as the holiday shopping season kicks off this year.
It’s concerning, given that consumer debt reached $13.86 trillion this year – an increase from the previous peak of $12.68 trillion during the 2008 financial crisis.
Millennials (ages 23-38) are most willing to admit that they’ll succumb to that pressure this holiday season – more than half (52%) said the holidays are an acceptable excuse to rack up debt, according to a new CreditCards.com report. As many as 3 in 5 millennials are willing to take on debt to buy gifts for their loved ones.
Millennials aren’t the only ones greenlighting credit card debt: 45% of credit cardholders overall are willing to pile on credit card debt this holiday season, with 49% of Gen Xers and 34% of baby boomers willing to dip into the red. (CreditCards.com surveyed 2,571 adults, including 2,143 credit cardholders.)
`Many millennials are more willing to go into debt this holiday season than older generations because they face a unique combination of financial challenges. Many graduated into the 2008 financial crisis and still have not recovered the wealth they would have accumulated had they sought jobs in a booming economy. Baby boomers had more wealth when they were in their mid-20’s and 30’s than millennials have today.
“I think there’s just the classic student loans, early-career salaries, all these things come together and mean that millennials are facing a lot of financial pressure around the holidays,” says CreditCards.com industry analyst Ted Rossman, adding that another major cost is travel.
“Millennials are the most likely to be traveling around the holidays and that really applies whether they have kids or not. I think it is still traditional in many millennials lives that they’re going home for the holidays and that’s going to involve a flight and there’s a big cost associated with that,” he says.
Being a parent of a young child also adds to that pressure. 65% of cardholders overall with young children are willing to go into credit card debt this holiday season, compared to 40% of cardholders who have no kids, according to CreditCards.com. “I think a big part of it is that many millennials are parents. We definitely saw a strong correlation in the study between parents and willingness to go into debt for the holidays. Because you want to give your kids a good holiday,” says Rossman.
Cardholders who already have debt are more likely to add more. Overall, 61% of Americans with a credit card balance are willing to amass more debt, compared to 30% of cardholders without debt, according to the survey.
Rossman suggests that debt-strapped consumers try to minimize the added debt during the holidays by taking on a side hustle, getting a 0% balance transfer card, or considering cheaper gifts.
Sticking to minimum credit card payments every month means living closer to the edge. “You don’t want to be paying off Christmas 2019 at Christmas 2020. But if you’ve just been in debt for years where does one begin and the other one end. It’s really hard to say. It’s a pervasive long term problem,” says Rossman.
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