Upcoming holiday season will see overspending and more credit card usage
Oct 12, 2023, 5:00 PM
(Ben B. Braun/Deseret News)
SALT LAKE CITY — Most shoppers will be spending too much this holiday season, according to a recent CNET survey. It found that nearly seven out of 10 people said they would likely overspend.
It isn’t a surprise to Shane Stewart, a financial planner with Deseret Mutual Benefit Administrators. He said that since most people in the U.S. have jobs, they have a sense of confidence about what they can afford.
- The short take:
- a CNET survey found that seven out of 10 people will likely overspend this holiday,
- overspending usually happens when people don’t have a holiday budget,
- overspending usually happens on credit cards,
- create a holiday budget.
No holiday spending budget
The survey blamed much of the overspending on the absence of a holiday budget. CNET said only 24% of respondents plan to use one.
Stewart said a majority of us don’t have a budget, so we end up putting purchases on credit.
“If you go over budget slightly for Christmas or something like that, that’s probably okay. You’ll probably make that up in the next year,” Stewart told KSL NewsRadio.
“But, if you overspend significantly, you could be paying that off for decades.”
Credit card trap
The survey said nearly half of holiday purchases will be made with credit cards. On top of that, 21% of respondents said they’d take multiple billing cycles to pay those cards off.
Credit cards become even more appealing, Stewart said, because a lot of cards and store credit offers have a low introductory rate.
But, it’s a trap.
“If you’re not a careful manager of even those introductory offers, you could really end up paying a whole lot more than you intended to,” Stewart said. “It’s not just what you have left to pay, it’s retroactive, back to when you started.”
Overall, Stewart said overspending with credit cards can put you in a bad position.
“This is not a good time to bring on a debt because those rates are high. And those rates are high for a reason, to try to slow the economy down.”
If those high rates don’t work, Stewart said the Fed will just raise rates again. Then, credit card debt will become an even heavier burden.
Start with a spending plan
To avoid being caught up in debt, Stewart recommends making a spending plan. Start by figuring out how much you’re already spending. It doesn’t have to be down to the penny, Stewart said.
“Just some general ideas of what you spend each month and then what might you have in the budget that you can afford.”
Look over the past couple of months to get a good idea of what your spending plan should look like.
Stewart said taking those steps will help keep you out of trouble.
“We live in an immediate gratification-type environment. And those that stick with immediate gratification and don’t have the money to back that up find themselves in real trouble, especially when an economy goes down. And when they do, if you’re over that barrel of debt, you will have that problem.”
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