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Holiday Debt and How to Avoid It

December 13, 2019 | by Anna Orendain

It's the holiday season, and for many Americans, that can mean a higher rate of credit card spending. Between spending money on gifts, airfare, and enough food to feed the whole family, the cost of enjoying end-of-year festivities can ramp up quickly. 

In fact, according to an annual survey conducted by MagnifyMoney, consumers who said they went into debt over the 2018 holiday season accumulated an average of $1,230 in debt. This number is up from $1,054 in 2017 and $1,003 in 2016.

What's even more striking than the steady increase in holiday credit card debt is the fact that 64% of debtors had not been expecting to go into debt for their holiday spending.

Not to mention that while 42% of those surveyed said they expected to pay off their debt within three months, 49% of holiday borrowers stated that it would take five months or more to pay off their debt. 22% of these individuals plan to only make the minimum payment on their holiday spending debts.

MagnifyMoney claims that, actually, if one were to make minimum payments of $30 a month at an annual percentage rate of 16.5% (the national average credit card interest rate) with $592 in interest, it would take more than five years to pay off $1,230 in holiday debt. 

Staying On-track with Financial Counseling

The good news is that, while the reality of holiday debt can be scary, there are housing and financial counselors who can help you manage and pay down your debt quicker. Paying off a debt early not only saves you money in interest charges, but will help you get back on track with long term financial goals, like buying a home.

A 2016 study produced by the National Foundation for Credit Counseling (NFCC) demonstrates how financial counseling provided by trained nonprofits can help consumers tackle their debt faster. When measured over an 18 month period, the 6,000 consumers that received financial counseling decreased their credit card debt by nearly $6,000 and their total debt by nearly $9,000.

In comparison, the consumers who did not receive counseling reduced their credit card debt by only $3,600, while their total debt actually increased slightly during the 18 month period. 

So this December, if you'd like to stay focused on financial goals, we recommend contacting a nonprofit housing and financial counselor to help you pay down current debts, avoid overspending this month, and get your finances more on track to achieving your goals. To find a nonprofit counselor in your area, visit TSAHC’s Texas Financial Toolbox website at www.texasfinancialtoolbox.com.


On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.

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