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Holiday Spending Expected to Reach Record High

This year, parents are gearing up to splurge on their children during the holiday season. According to a recent report by TransUnion, 63% of millennials plan to spend the same or more on holiday shopping as they did last year, making them the generation most likely to open their wallets.

Millennials’ Optimism Fuels Spending

The optimism is rooted in recent wage gains, which have outpaced rising prices, and a steady employment situation. Charlie Wise, TransUnion’s senior vice president and head of global research and consulting, notes that when people have jobs, their confidence translates into spending.

Record-Breaking Holiday Spending Forecast

The National Retail Federation predicts holiday spending between November 1 and December 31 to reach a record total of $979.5 billion to $989 billion. Meanwhile, Deloitte’s holiday retail survey found that holiday shoppers expect to spend, on average, $1,778, up 8% compared with last year.

Credit Card Debt and Buy Now, Pay Later Services

Despite credit card debt topping $1.17 trillion, holiday shoppers are undeterred. While most shoppers use credit cards to buy holiday gifts, 28% will dip into savings, and 16% will lean on buy now, pay later services. However, experts caution that managing multiple buy now, pay later loans with different payment dates can lead to overspending and debt.

The Risks of Buy Now, Pay Later

Marshall Lux, a senior fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School, notes that while buy now, pay later can make financial sense at 0% interest, it can also lead to a cycle of debt if not used properly. The more buy now, pay later accounts consumers have open at once, the more prone they become to overspending, missed or late payments, and poor credit history.

Responsible Spending Habits

As the holiday season approaches, it’s essential to adopt responsible spending habits. Consumers should be mindful of their spending limits, avoid overspending, and make timely payments to avoid late fees and interest charges. By doing so, they can enjoy the festive season without compromising their financial well-being.