A new report released this morning by LendEDU found many Americans are taking on a record amount of credit card debt this holiday season as a result of mounting expenses in the middle of the pandemic recession.
The report found 67% of Americans are reducing their holiday shopping budget this year due to the coronavirus pandemic and its economic impacts. This includes 86% of Americans who are still out of work after getting laid off because of the pandemic,
With budgets reduced, Americans still need to rely on credit card debt to make their holiday purchases. LendEDU’s data, which is based on a survey of 1,000 adult Americans, found 33% of shoppers are taking on credit card debt to cover the costs of holiday shopping, including 51% of shoppers who are still out of work because of the pandemic.
For 63% of Americans taking on credit card debt this holiday season, the debt will be the most they’ve ever taken on as a result of holiday shopping. Amongst Americans who are still out of work due to the pandemic, 75% of them will be taking on a record amount of credit card debt this holiday season.
You can see the full LendEDU report here: https://lendedu.com/blog/credit-card-debt-holiday-shopping-coronavirus-study/
From the LendEDU report: “For consumers, especially the unemployed, racking up credit card debt is the only choice when bank accounts have been drained during an economic crisis. This can become a major issue when the economic crisis coincides with the holiday season because debt can rapidly snowball.”
The report continued: “The pandemic and its negative economic impact have led to a lot of Americans taking on a lot of credit card debt to get by and debt brought on due to holiday shopping has made it even worse.”
In addition to the financial ramifications of credit card debt, LendEDU also found this credit card debt is leading to physical consequences. 55% of respondents indicated they are losing sleep over the credit card debt they have amassed during the pandemic and from holiday shopping, including 72% of those who are still unemployed.
When it comes to managing credit card debt, the most important thing to do is to stay on top of monthly payments and to know all available options. For example, a balance transfer credit card might be useful to potentially help save some money on interest, which should reduce the severity of the debt burden.
LendEDU, a personal finance comparison and information site, is based out of Hoboken, New Jersey, and aims to help consumers make educated financial decisions from college financing to homebuying. Follow LendEDU on Twitter.