Holiday Shoppers Are Worried That High Prices Will Make It Harder to Buy Gifts; Many Will Take On Debt To Make up the Difference, New Financial Stress Study Shows
Survey findings from Beyond Finance, a national leader in the debt help industry, reveal that acute financial stress caused by inflation may deflate holiday cheer.
Purpose of the Financial Stress Survey
With inflation hitting a 40-year high this year and many Americans struggling economically, the Beyond Finance team surveyed consumers and found that many of them are falling into debt and having difficulty finding their way out.
This troubling trend aligns with data from the Federal Reserve Bank of New York which shows that credit card balances experienced their largest increase in more than 20 years in the second quarter of 2022, and overall household debt jumped to $16.2 trillion, an all-time high.
In this environment, the approaching holiday season presents unique challenges for consumers, financially and emotionally. We wanted to know how Americans prepare for — and feel about —holiday shopping in the context of high inflation and increased financial stress. Working with the third-party survey platform Pollfish, we asked 1,081 U.S. adults to share their thoughts and plans.
Here are the results of that financial stress survey.
Profile of Respondents
- 86% plan to spend over $250 on holiday shopping, with 56% planning to spend over $500 and 23% over $1,000
- 78% currently have credit card debt, with 43% having more than $5,000 in credit card debt and 21% having more than $10,000
- 68% have a household income greater than $50,000 per year, with 27% reporting income over $100,000
Key Findings
- More Americans are worried about being able to afford holiday shopping this year, mainly due to inflation concerns
- Because of rising costs, holiday shoppers expect to rely more on credit cards this year
- Most consumers believe that shopping will have a negative effect on their holiday spirit this year
- Those already in significant debt have the biggest worries — but also the biggest challenge —breaking the cycle of overspending
- Comparatively, those who intend to spend primarily with cash this year are relatively debt- and stress-free
More Americans are worried about being able to afford holiday shopping this year, largely as a result of inflation concerns.
Many shoppers contacted through this financial stress survey made clear that they are approaching the holidays with trepidation because of inflation. In most cases, these consumers have also already adjusted their holiday spending plans, which they directly attribute to inflation.
When asked, “Compared to last year, how concerned are you about being able to pay for holiday gifts?” 57% answered either ‘much more concerned” (25%) or “somewhat more concerned” (32%). Only 10% reported being “less concerned” (7%) or “much less concerned” (3%). About 33% of respondents said their concern was “about the same” as last year.
Respondents attributed their concerns to various personal factors — mostly higher prices. When asked, “Have any of the following factors forced you to reduce your planned holiday spending for this year?” 60% cited inflation, while others cited job loss, medical emergencies and unexpected expenses, such as car and home repairs.
- Four out of five respondents said that inflation has affected their holiday spending plans. Among these, 53% said they plan to buy fewer or less expensive gifts; 23% said they were planning to spend significantly more this year because of inflation; 21% said they had done their shopping early because they expected gifts to cost more later in the year (as a result of inflation); and only 19% said inflation did not affect their plans at all.
- To manage their holiday spending, 81% of respondents expected to reduce their spending in categories such as gifts (39%), meals out (44%), travel (37%), celebrations and events (30%), and other categories (5%). Only 19% said they did not expect to reduce spending in any of these categories compared to last year.
Holiday shoppers expect to rely more on credit cards this year because of rising costs.
Half of those surveyed said they would be using credit cards to fund the majority of their purchases, with many attributing this to finding themselves in a more challenging financial position than last year. Respondents were split evenly when asked whether they expected holiday shopping to have a negative effect on their financial health.
More than half of respondents (57%) said they planned to primarily pay for their purchases through one of the following methods: credit cards (50%), “buy now, pay later” offers (6%), or loans/cash advances (1%).
- Among the 21% of respondents with more than $10,000 in credit card debt, 63% said they planned to pay through one of these methods: credit cards (55%), “buy now, pay later” offers (5%), or loans/cash advances (3%).
- 41% of respondents said they would use their credit cards more this year because they have less cash and savings. Only 23% said they would be using their credit cards less. And 36% said they would use them about the same amount as last year.
- Among the 43% of respondents with more than $5,000 in credit card debt, 56% said they would use credit cards more this year because they lack cash and savings.
- When asked, “Are you worried that your holiday shopping will have a negative effect on your financial health?” 50% said yes and 50% said no. However, among those with more than $5,000 in credit card debt, 66% said yes and 34% said no.
Most consumers believe that shopping will have a negative effect on their holiday spirit this year.
Holiday cheer may be in short supply for those struggling with holiday spending — these survey results clearly show that financial stress affects consumers’ financial and emotional health.
More than two-thirds of respondents (68%) said they expected holiday spending to worsen their stress levels this year, with 53% saying it would “cause some stress” and 15% saying it would “cause significant stress.”
- When asked, “How do you expect holiday shopping and its related costs to affect your mood during the holiday season this year?” nearly half (48%) expected negative consequences — with 22% saying they feared holiday shopping would put them “in a bad mood around family and friends,” and another 26% saying it could “spoil their holiday completely.”
- Stress levels are considerably higher for those carrying credit card debt. Of the 43% of respondents who said that they have more than $5,000 in debt, 81% said holiday shopping would worsen their stress levels, 29% said it would put them in a bad mood around family and friends, and 36% said they feared it would ruin their holiday completely.
- Nearly half of respondents (49%) said the expectations of family and friends contributed to their stress. This included 25% who said family and friends expect them to “host or contribute financially to holiday dinners, parties and other celebrations,” 21% who said “they expect me to buy them expensive gifts,” 20% who said “they expect me to pay to travel to see them,” and 15% who said “they expect me to pay for them to travel to see me.”
Those already in significant debt have the biggest worries, but also struggle the most with breaking the cycle of overspending.
One of the most troubling findings in this study is that consumers who are most in debt and relying on credit cards plan to spend more this year than those in a better financial position.
- For those with more than $10,000 in credit card debt who plan to primarily spend through credit this year, more than a third (35%) plan to spend more than $1,000 on gifts. That compares with those consumers who carry no debt and plan to make their purchases with cash or debit cards — only 11% of this group planned to spend more than $1,000 on gifts.
- Those with over $5,000 in credit card debt who planned to spend over $1,000 on gifts were much more likely to blame the expectations of family and friends for their challenges. Three-fourths of this group (75%) said the expectations of family and friends added to their stress, compared to 49% of all respondents and just 24% of those who carry no debt and plan to make their purchases with cash or debit cards.
- Of those with over $5,000 in credit card debt who plan to spend over $1,000 on gifts, 42% said their family and friends expect them to host or contribute financially to holiday dinners, parties and celebrations; 36% said they expect expensive gifts; 35% said they “expect me to pay to travel to see them;” and 29% said they “expect me to pay for them to travel to see me.”
When asked, “Are you worried that your holiday shopping will have a negative effect on your financial health?” almost two-thirds (66%) of respondents with more than $5,000 in credit card debt confirmed they were, compared to 34% who were not worried.
The demographic most likely to be stressed out and heavily in debt turns out to be men between 35 and 44. Among this group, 58% have more than $5,000 in credit card debt, compared to 43% of all respondents. Among the men in this age range with any credit card debt, 42% said they feared that holiday shopping and associated costs would spoil their holiday completely.
Debt-free consumers who intend to spend mostly cash this holiday season are comparatively stress-free.
We also found on the financial stress survey that consumers who are less burdened by debt and who plan to use mostly cash and debit cards to shop this year are poised to enjoy a much more joyful holiday season.
- Among those who are debt-free and plan to spend primarily cash for the holidays, 69% said they did not expect their holiday spending to affect their mood negatively. Additionally, 76% said the expectations of family and friends were not a cause of financial stress.
- Among this group, only 39% were concerned about inflation, nearly half (46%) saying they plan to spend the same amount as last year by buying fewer or less expensive gifts to offset inflation, and 35% saying that inflation has not affected their holiday spending plans at all.
- When asked, “Are you worried that your holiday shopping will have a negative effect on your financial health?” fewer than a third (31%) of debt-free, cash-spending respondents said “yes” compared to 66% of those who plan to primarily use credit cards and have more than $5,000 in credit card debt.
Methodology
Beyond Finance used the third-party survey platform Pollfish to conduct an online financial stress survey of 1,081 U.S. consumers with an annual household income over $25,000 — including 925 (86%) who said they planned to spend at least $250 on holiday shopping — on Aug. 15 and 16, 2022. Researchers reviewed all responses for quality control.
For more information, contact either Yolanda Schufford ([email protected]) or Shawn Paul Wood ([email protected])