Now that the holiday season is coming to an end, the debt hangover is starting to hit — and Americans are feeling the pain. According to a survey by MagnifyMoney, consumers added $1,230 in debt during the 2018 holiday season, compared with $1,054 in 2017.
“It’s a bit concerning,” said Mandi Woodruff, executive editor of MagnifyMoney. “We are seeing a continual trend of people feeling comfortable taking on debt over the holidays.”
The survey found 64% of those in holiday debt didn’t plan to get into debt this holiday season and 62% of those with holiday debt are stressed about it.
With credit card rates reaching a new high, this holiday season may take an extra toll on your wallet.
Who took on the most debt?
Millennials, ages 22 through 37, took on the most debt this season, with an average of $1,318. Gen Xers (38 through 53) had an average debt of $1,272 and baby boomers (54 though 72) had an average debt of $1,186.
Millennials may take on more debt because they are looking to “show off” to their friends and family around the holiday season, said Woodruff.
“They want to keep up with the Kardashians,” she said. “When you’re younger, you may feel more pressure to deliver.”
This generation is also growing older. They are no longer just college kids and young adults, Woodruff said. Many are entering or are in their 30s. They're undergoing big, expensive life changes, like having a baby or buying a home. This may lead to increased spending during the holiday season.
Luckily, younger people have more time to pay off their debts, making it easier to start 2019 debt-free. (Here’s a guide to get you started on hacking holiday debt.)
Why do Americans take on debt?
Woodruff said the survey results speak to a larger trend of Americans treating plastic as king. She said consumers across the country feel more confident about spending on their credit cards. The survey reports that 68% of those with holiday debt put it on credit cards.
Debt isn’t necessarily a bad thing, unless you don’t have a plan to pay it off, said Woodruff. Less than half of the survey respondents said they will pay off their debt in less than three months. 49% say they will take five or more months to pay it off.
What to do if you’re in debt
Though paying off your debt can seem like an impossible task, taking small steps can help you chip away at your payments, or at least buy you more time to pay them off.
The first step is to take stock of your situation.
“Once the holiday joy and fun wears off, you may not want to dive into your financial situation,” said Woodruff. “But you don’t want to go into the new year with debt.”
Next, try to start paying off your balances each month to avoid interest payments. See if you qualify for a balance transfer, which moves high-interest debt from one or more credit cards to another card with a lower or zero interest rate.
Looking for more ways to pay off holiday debt? Here’s some ways to pay off your debt in 30 days.
Did you take on debt this holiday season? How do you plan to deal with it? Tell us in the comments.