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Personal finance experts say higher prices and interest rates are making it harder for people to pay down their debt, and some shoppers are planning to take on more this holiday season.A new report from the Federal Reserve Bank of New York shows credit card debt nationwide is approaching $1.17 trillion, the highest level on record since at least 2004. Nevertheless, the National Retail Federation projects holiday spending will reach a new record this season. “We are expecting the average shopper to budget around $900 per person for things like gifts and seasonal items like candy, food and decorations,” said NRF’s vice president of industry and consumer insights, Katherine Cullen. According to Bankrate.com’s Holiday Spending Report, more than one in four shoppers expect to take on more debt this year.”I think the end result is going to be higher just because half of credit card holders already carry debt from month to month,” said Bankrate Senior Industry Analyst Ted Rossman. Unplanned purchases could be partly to blame. Another Bankrate.com survey found more than half of U.S. adults were guilty of at least one impulse buy last holiday season and many regretted it.”It’s on top of higher bills for housing and food and credit card interest and all these other things,” said Rossman. The average credit card interest rate is currently 20.42%, down slightly from the record high in August.WalletHub Analyst Chip Lupo says that to prevent mounting debt, stick to a planned budget and avoid carrying a balance if possible.“The key is that you have to pay that bill off in full by the next billing period. Otherwise, the interest is going to cancel out your rewards and any savings that you might have done during your Black Friday shopping,” Lupo said.Experts also recommend avoiding store-branded credit cards because high interest rates often negate any initial discounts. Bankrate.com reported in September that the average interest rate for retail cards was at an all-time high of 30.45%, and many stores had even higher rates.
Personal finance experts say higher prices and interest rates are making it harder for people to pay down their debt, and some shoppers are planning to take on more this holiday season.
A new report from the Federal Reserve Bank of New York shows credit card debt nationwide is approaching $1.17 trillion, the highest level on record since at least 2004.
Nevertheless, the National Retail Federation projects holiday spending will reach a new record this season.
“We are expecting the average shopper to budget around $900 per person for things like gifts and seasonal items like candy, food and decorations,” said NRF’s vice president of industry and consumer insights, Katherine Cullen.
According to Bankrate.com’s Holiday Spending Report, more than one in four shoppers expect to take on more debt this year.
“I think the end result is going to be higher just because half of credit card holders already carry debt from month to month,” said Bankrate Senior Industry Analyst Ted Rossman.
Unplanned purchases could be partly to blame. Another Bankrate.com survey found more than half of U.S. adults were guilty of at least one impulse buy last holiday season and many regretted it.
“It’s on top of higher bills for housing and food and credit card interest and all these other things,” said Rossman.
The average credit card interest rate is currently 20.42%, down slightly from the record high in August.
WalletHub Analyst Chip Lupo says that to prevent mounting debt, stick to a planned budget and avoid carrying a balance if possible.
“The key is that you have to pay that bill off in full by the next billing period. Otherwise, the interest is going to cancel out your rewards and any savings that you might have done during your Black Friday shopping,” Lupo said.
Experts also recommend avoiding store-branded credit cards because high interest rates often negate any initial discounts. Bankrate.com reported in September that the average interest rate for retail cards was at an all-time high of 30.45%, and many stores had even higher rates.
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