Consumers shopped a record $9.12 billion online during Black Friday and a record $11.3 billion on Cyber Monday. latest data from adobe, So far this November, consumers have spent a total of $107.7 billion online, up nearly 10% from last year.
yet roughly 60% of Americans were living paycheck to paycheck,
“Despite inflation and economic headwinds, buyers are continuing to spend,” said Tom McGee, ICSC President and CEO.
As higher prices continue to weigh on the finances of most households, more buyers are relying heavily on credit cards and flexible payment plans to make their purchases.
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Inflation increases US household spending by $433 per month
but with annual percentage rates closer to 20%, or even 30% on select retail cardsIt can take years to pay off credit card debt.
While Buy Now, Pay Later often promises zero interest, studies Studies have also shown that installment purchases can encourage consumers to spend more than they can afford.
Last year, more than half of shoppers made purchases BNPL they couldn’t payAccording to a survey by Oxygen, an online-only bank.
This year, Americans are also on track to fall deep in debt, However, experts say it is not too late to avoid similar financial losses this season. This way.
How to avoid racking up holiday debt
Black Friday shoppers wait to enter the Nike store at Opry Mills Mall on November 25, 2022 in Nashville, Tennessee.
Seth Herald | AFP | Getty Images
1. Cut up your credit card
If your credit card balance already seems unmanageable, “it’s time to cut it and focus on paying it down,” said Lori Gross, financial advisor at Outlook Financial Center in Troy, Ohio.
“If you still have to shop during the holiday season use cash by this point.”
2. Build a Strategy
Add up what you’ve bought so far and set a budget for the rest of the season, Gross said. “If you’ve already spent a lot this should be significantly less.”
She suggests sharing your strategy with a family member or friend so they can help you stay on track with your new budget and keep you from getting into debt. There are also apps and free online resources that can help you organize your finances for the holiday season.
3. Build a Holiday Fund
It’s never too late to start a holiday fund. “Have a strategy now and hold yourself accountable,” said Michael Sheppard, group vice president at Thrivent, a Minneapolis-based financial services firm.
Challenge yourself to save money every week, he advises. “Making regular transfers from spending accounts to a designated vacation savings account for future purchases can really add up.”
4. Communicate with your family and friends
If you want to ease your festivities, start those conversations with your loved ones now, Shepard advised. “In lieu of exchanging gifts, perhaps there is a holiday event, concert or theater performance that your family can attend together,” he said. “Make the shared experience a cost-saving memory.”
also consider a charitable donation instead of gifts. Sheppard said that taking time to volunteer can prove especially meaningful.
“It can help you stay focused on the matters you want to accomplish and bring clarity to the holiday season.”