More than a third of Americans spend on loan during the holidays

This holiday season, more than a third of Americans are choosing to spend on credit.

According to a new survey from LendingTree , more Americans are choosing to borrow money to spend this holiday season than in 2020.

For a variety of reasons , from preparing travel plans to buying gifts for loved ones , more than a third of U.S. consumers ( 36% ) chose to borrow money this holiday season , up from 31% in 2020. This year, the average borrower owed $1,249, down 10% from $1,381 last year.

While the majority ( 62% ) of holiday borrowers are using credit cards to finance their holiday purchases , nearly 40 % of Americans are also using buy now , pay later ( BNPL ) to purchase holiday items this year, up slightly from 37% in 2020. Interestingly, buy now, pay later is most common among young parents ( 64% ) , those earning six figures ( 61 % ) , and millennials ( 60% ) .

BNPL is a deferred payment option that allows consumers to pay for products in installments, usually in four or fewer installments. It has quickly gained popularity due to its fast application process , relatively little personal information required by applicants , and wide applicability .

But also because of the low application threshold, as BNPL becomes more and more popular in the United States, concerns about accumulated debt , regulatory arbitrage and data collection led the Consumer Financial Protection Bureau ( CFPB ) to investigate BNPL providers Affirm, Afterpay, Klarna, PayPal and Zip this month .

According to The Washington Post , Americans are expected to have $70 billion in credit card debt by the end of the holiday season , and according to Trans   Another forecast from Union predicts that U.S. borrowing will increase to a staggering $805.7 billion in 2022. This suggests that the pandemic has not affected strong consumer demand this holiday season .

Mastercard   Spending   Pulse compiled data on Mastercard payments as well as cash and check payments and found that from November 1 to December 24, U.S. retail sales increased 8.5% year-on-year, and sales increased 10.7% compared to 2019.

As shoppers returned to physical stores this year, in-store sales increased 8.1% compared to 2020. Online sales increased 11% year-over-year and increased 61.4% compared to 2019, accounting for 20.9% of total retail sales this year.

Buy now, pay later

credit card

holiday