Americans with Holiday Debt Added $986 on Average

Each year MagnifyMoney asks consumers how much debt they racked up over the holiday season.

See historical results here:

2017
2016
2015

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The holidays over, and we are back to work.

But for many of us, the holidays linger in fresh debt that paid for holiday gifts and celebrations, with bills that will start hitting mailboxes in the coming weeks.

In 2015, MagnifyMoney surveyed a national sample of 403 Americans who reported they added debt during the holidays via Survata and found:

Americans with holiday debt added $986 in debt on average.

Between gifts, hosting parties, family emergencies, and for some, fewer work hours, it’s easy for debt to add up if you don’t have savings on hand. While the $986 those surveyed added to their debt on average is a manageable amount, it can easily snowball.

At a 15% rate on a credit card making just the minimum $25 payment it would take 10 years to pay off, including nearly $400 in interest paid, almost doubling the cost of the holidays.

44% of debt holders report they are stressed out about it.

Credit cards were the most common form of debt.

52% of debt holders used a bank or credit union credit card to finance their holiday debt, while another 30% used store cards to finance, which often carry rates of 20% or more. 8% took a specific personal loan, which could yield a lower rate, while 6% relied on the worst of all – payday and title loans. Less than 5% used home equity lines of credit to finance purchases.

The payoff may take until next Christmas and beyond

Less than half of those surveyed think they can pay off their holiday debt in less than 5 months. 55% plan to take more than 5 months or just make the minimum payments,  which could extend the debt to 10 years or more.

Rates being paid are high

One third of respondents say they’re paying a rate of over 10% on their debt, with 20% of them paying more than 15%. And 14% of respondents don’t even know what rate they’re paying.

But most won’t bother to get a lower rate

Despite 28% of respondents expecting to take 5 months or more to pay off the debt, just 22% plan to shop around to find a better rate with a different bank or loan.

Yet, 47% report a good credit score above 650 that may qualify for better rates than most existing credit cards and store cards offer.

The most cited reason for not wanting to shop around is not wanting to deal with another bank, noted by 28% of respondents.

A consumer with $1,000 in debt at a 15% rate making minimum payments would shave over a year off debt repayment by taking advantage of the longest 0% balance transfer deal on the market and save over $300 in interest payments.

What can be done?

MagnifyMoney has prepared a free 45 page Debt Free Forever Guide that you can download to prepare your action plan, tailored to whether your situation needs a quick transfer, or more significant repair and dealing with collections.

You’ll learn no-nonsense ways to get your rate lower, negotiate hard with creditors, and tackle your budget to find the fastest way to get debt free.

Survey results

Average new holiday debt   $986

Holiday debt funded by a….  

• Credit card       52%
• Store card        30%
• Personal loan   8%
• Payday / title loan  6%
• Home equity    4%

When will you pay the debt off?        

• 1 month           15%
• 2 months         11%
• 3 months         12%
• 4 months         6%
• 5 months+       28%
• Only making minimum payments        27%

What is your credit score?      

• Above 700       27%
• 650-700           20%
• 550-649           20%
• Below 550       10%
• Don’t know      25%

Will you shop around for a better rate with a different bank or loan? 

• Yes      22%
• No- Don’t want to deal with another bank       28%
• No – Too many traps   17%
• No – Rate is already low          10%
• No – Don’t know enough about it        10%
• No – Wouldn’t qualify 14%

How stressed are you about your holiday debt?        

• Not stressed    56%
• Stressed           44%

What rate are you paying on your debt?        

• Less than 5%   35%
• 5-9%   18%
• 10-14%           13%
• 15-19%           11%
• 20% or more   9%
• Don’t know      14%

Methodology

MagnifyMoney surveyed 403 Americans who answered yes to the screening question “Did you add debt for holiday spending this year?”

The survey was conducted online January 2 – 4 2015 via Survata, using a nationally representative sample age 25-65.