Americans are set to break holiday spending records even as credit card balances reach record levels.
Key Facts:
– The National Retail Federation projects up to $989 billion in holiday spending.
– Thirty-six percent of consumers took on debt, averaging $1,181 in holiday charges.
– Credit card balances climbed 8.1% from last year, according to Federal Reserve data.
– Average credit card interest rates exceed 20%, near an all-time high.
The Rest of The Story:
Recent surveys indicate many shoppers are leaning on credit cards to cover holiday gifts.
That could mean months of steep interest charges, making it harder for some households to meet other financial goals.
At the same time, job growth and pay raises have boosted consumer confidence.
Many feel comfortable splurging, but inflation and rising prices also push individuals to rely more on credit.
Credit card debt hit another all time high.
If you look at the second chart (red line) you’ll notice an interesting pattern pre recession. pic.twitter.com/cZQQZ0RRKw
— George Gammon (@GeorgeGammon) December 27, 2024
Commentary:
Bidenomics has contributed to higher inflation, which pinches household budgets and leads people to depend on credit cards for their Christmas lists.
In the long run, this mounting debt risks placing a drag on the economy.
As more families stretch themselves thin, they may reduce everyday spending down the road, slowing overall growth and creating deeper financial strain.
The Bottom Line:
Record holiday spending isn’t always a positive sign if fueled by soaring credit card debt.
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Balances are climbing, and that could weigh on both families and the broader economy.