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Americans With Holiday Debt Added an Average of $1,230 — Up From $1,054 in 2017

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Consumers taking on holiday debt this season used more credit than last year, piling on an average $1,230, according to an annual survey conducted by MagnifyMoney. This marked an increase from $1,054 during the 2017 holiday season, and $1,003 in 2016.

And what’s more, most of those borrowing for the holidays — a full 64% — said they hadn’t expected to resort to debt for their seasonal spending.

Plastic is still king

In terms of the funding details, 68% of those with holiday debt put it on credit cards, about the same as last year, the survey found.

Personal loans were the second-most common way to finance the season’s costs, with 14%. Store cards came in third, cited as a primary means of credit by 10% of those taking on holiday debt.

The breakdown comes as online shopping is expected to be “especially strong,” with a 19.1% rise over the last year, according to Mastercard’s SpendingPulse™ forecast released Dec. 26.

This is more than double what was spent in e-commerce five years ago, and compares to a 5% growth for total retail sales, excluding automotives, according to the forecast, which covered Nov. 1-Dec. 24 period.

Millennials most dependent on credit

Our survey also showed that the level of holiday debt was heavier on younger consumers.

Millennials with holiday debt spent the most on credit, with an average $1,318. Gen Xers came next, at $1,272, followed by baby boomers, with an average of $1,186.

Lingering, stressful debt

Among respondents with holiday debt, 62% reported feeling stressed about it. Some of this might be because, as mentioned earlier, a similar percentage said they hadn’t planned to fund their holidays with credit. But the lingering nature of the debt could be a factor as well.

Almost half of the holiday debtors surveyed (49%) said it would take five months or longer to pay off the season’s debt, including 22% who said they only plan to make minimum payments on that debt.

In fact, MagnifyMoney’s Credit Payoff calculator shows it would take more than five years to repay $1,230 in holiday debt if you make minimum payments of $30 a month at an annual percentage rate of 16.5%, which is the current national average credit card interest rate, according to recent Federal Reserve data. This would include a hefty $592 worth of interest.

On the other hand, 42% of those surveyed with holiday debt said they expect to have it paid off in three months or less.

Not all interest is equal

With most holiday deficit spending done on credit cards, the potentially heavy interest costs for the 2018 holiday season might not come as much of a surprise. As we’ve reported, Americans are already paying over $100 billion in credit card interest annually, up by more than 35% over the last five years.

But while 16.5% might be the current average credit card APR, not everyone is paying that much. Among those taking on holiday debt, 38% reported paying 10% or less in interest. This includes those savvy consumers taking advantage of 0% APR offers, although just 27% of respondents with holiday debt said they were considering a balance transfer to lower the rate on their credit cards.

Taking measures to slash the interest on your debt — whether through 0% balance transfer cards or even paying off that debt under a consolidation loan — are generally wise moves. If you find yourself snowed under with credit card bills this holiday season, consider ways to save on interest as your repay them in the new year.

Methodology: MagnifyMoney conducted an online survey via Qualtrics from December 21-24, 2018, with 769 adults who reported they added debt over the holidays this year. Percentages may not add up to 100% due to rounding. The margin of error is +/- 4%, and the incidence rate was 35% from a sample of 2,180 adults.

2018 Post-holiday debt survey questions

Average debt among shoppers who said they went into debt over the holidays

2018: $1,230

2017: $1,054

Average debt by generation among shoppers who said they went into debt over the holidays

Millennials (age 22-37): $1,318

Gen X (age 38-53): $1,272

Boomers (age 54-72): $1,186

Did you plan to go into debt this year?

Yes: 36%

No: 64%

How much debt did you take on over the holidays?

Under $1,000: 54%

$1,000-1,999: 22%

$2,000-2,999: 13%

$3,000-3,999: 4%

$4,000-4,999: 1%

$5,000-5,999: 5%

$6,000+: 1%

Where did your holiday debt come from?

Credit cards: 68%

Personal loan: 14%

Store cards: 10%

Payday / title loan: 7%

Home equity loan: 1%

When will you pay the debt off?

1 month: 11%

2 months: 13%

3 months: 18%

4 months: 9%

5 months+: 27%

I’m only making minimum payments: 22%

Will you try to consolidate your debt or shop around for a good balance transfer rate?

Yes: 27%

No – don’t want to deal with another bank: 15%

No – too many traps: 11%

No – Rate is already low: 16%

No – Don’t know enough about it: 18%

No – Wouldn’t qualify: 14%

How stressed are you about your holiday debt?

Stressed: 62%

Not stressed: 38%

What interest rate are you paying on your debt? (percent)
Less than 10%: 38%

10-19%: 30%

20-29%: 25%

30%+: 7%

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Here’s Why Single Women Are Buying More Homes Than Single Men

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Right after she turned 30, public relations pro Wendy Hsiao put in an offer on a cute brick townhouse in Atlanta. “For a lot of my friends, being an adult started either when you got married or had a baby,” she said. “I chose to buy a house.”

Why did she buy? She felt ready for a major life change, considered buying to be a smart financial decision and wanted a yard for her Pomeranian named Georgia. “I felt like it was time to make a place my home,” Hsiao said.

Her story is one example of a growing trend: the rise of single female homeownership. Single women are far more likely to become homeowners than single men, according to a study on singles owning homes by LendingTree, which owns MagnifyMoney. In fact, single women own 22% of homes on average, while single men own less than 13%.

This “gender gap” stems partly from the fact that single women prioritize homeownership when setting life goals. In fact, 73% of single women list owning a home as a top priority compared with 65% of single men, according to the 2018 Homebuyer Insights Report from Bank of America.

Single women are “skipping the spouse and buying the house,” according to the Bank of America report, which found that single women rank homeownership as a goal above getting married (41%) and having children (31%).

From homemaker to homeowner

While there’s still work to be done, women have taken huge steps toward professional and financial independence. Homeownership in particular contributes to economic stability, so it’s great that more single women are buying homes. There’s no doubt the increase in the number of women in the U.S. workforce, a figure that has more than doubled since 1975, has contributed to the trend. Here are some other driving forces behind the rise of single female homeownership:

Homeownership empowers women. Homeownership offers a place to live, stability and a way to build wealth, so it’s no surprise women view owning a home as empowering. In fact, 31% of single women (vs. 23% of single men) feel empowered when thinking about buying their first home. A licensed real estate agent in Chicago, Martina Smith bought a condo in her dream neighborhood of Streeterville after she broke off an engagement a few years ago. Her budget only allowed her to buy a “fixer-upper,” but she got a great deal and renovated her place. “It’s been very rewarding and empowering,” she said. And she thinks it reflects a bigger national trend. “We’re seeing more women taking charge,” Smith said.

Women are becoming more educated. Over the past few decades, women have become more educated than men. In 2017, 38% of women and 33% of men ages 25 to 64 had a bachelor’s degree. In that age group, 14% of women and 12% of men had an advanced degree. And women are putting off marriage to pursue that education, according to the 2018 Women in the Housing & Real Estate Ecosystem report. Educational attainment has a positive impact on homeownership rates.

Women are done waiting to marry. There’s been a cultural shift where women no longer feel they need to wait until they pair up to embark on certain aspects of “adulting,” said Kelley Long, a CPA and certified financial planner with Financial Finesse. “I will never forget a friend’s dad chastising me for doing ‘nesting’ things like buying nice furniture before I was married because of his perception that you just don’t do things like that until you’re married,” Long said, adding that women are “rejecting that idea because it’s not true.” If you want to marry in the future, the right partner will likely be impressed that you were financially secure enough to buy a home on your own, she said.

Single moms want a home base to raise kids. “Oftentimes, when people buy homes it’s for lifestyles reasons,” said Tendayi Kapfidze, chief economist for LendingTree. Getting married is one big reason, but having children is the other, he said. About 21% of U.S. kids live with single moms, a number that has almost doubled since 1968. In contrast, just 4% of kids live with single dads. “Children prompt people to buy homes,” he said. “So that might be one of the factors at play.” And it’s not just kids. As many as eight in 10 caregivers for elderly parents are women. The median age of a single female buyer is mid-50s, points out Jessica Lautz, vice president of demographics and behavioral insights for the National Association of REALTORS. A single female homebuyer “may be coming from a past relationship and purchasing a new home for herself, her children and her parents,” Lautz said, adding that single females are “willing to make sacrifices” to purchase a home.

So what does the future hold for single women owning homes? If marriage rates among all U.S. adults continue to drop, it’s likely the number of single women purchasing homes will rise even more, Lautz said.

Turn your homeownership dreams into reality

Strict lending standards can make it more difficult to qualify for a mortgage on a single income. Considering women also only make 80% of what their male colleagues earn, getting to a financially secure enough position to afford homeownership may feel daunting. Here are three tips for single women looking to buy a home of their own:

  1. Prep your finances for homebuying. It’s important to check your credit and your debt-to-income ratio before you start the homebuying process. If you spot problems, work on increasing your credit score and paying down your debt before you try to get preapproved for a mortgage. Getting the best possible rate can save you money over the life of the loan, which is especially important when your household depends on a single income. The upside is that single women have complete control and don’t need to worry about anyone else’s shaky credit or loads of debt. “If you’re in a couple, somebody is going to be dragging the other person down,” Kapfidze said.
  2. Build your nest egg before you buy. Forty-eight percent of women say they haven’t purchased a home yet because they haven’t saved enough for a down payment. But that’s not the only savings barrier to breach before taking the leap into homeownership. “Make sure you have a robust emergency fund,” Kapfidze said. Because single homeowners are on their own, they should set aside at least three months of mortgage payments as part of their emergency fund, Kapfidze suggested. “If you’re single, you’re the only one with income coming in to pay the mortgage,” he said.
  3. Pick a home that comes in under budget. Single women have lower household incomes than single men, so they may need to consider buying a smaller home, taking on a house that needs some work or settling in a lower priced neighborhood. The good news is that single women may be doing exactly that. In fact, the average home purchased by a single woman cost $173,000 compared with over $190,000 for a single man. Single women “may need to make price concessions when purchasing to find a home for themselves and their families,” Lautz said. And buying less house than you can afford can help you make your mortgage payment more easily if you hit financial hard times in the future.

Finally, it’s normal to feel stressed when you think of buying a home. In fact, more women (40%) than men (30%) feel overwhelmed by the idea of homeownership. But even though the homebuying process was scary, Hsiao said she has zero regret about buying a home of her own: “If you love the house, it’s 100% worth it.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Allie Johnson
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Allie Johnson is a writer at MagnifyMoney. You can email Allie here

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