How Much Debt Will Americans Expect To Take on During Holiday Season 2021?

Couple going through financial problems.
EmirMemedovski / Getty Images/iStockphoto

The National Retail Federation (NRF) is predicting a blockbuster holiday season as Americans are expected to spend a record total of between $843.4 billion and $859 billion this winter. The economy-wide inflation that continues to cheapen the dollar is no secret. Shoppers are well aware of rising prices, they’re just choosing to shop their way through them.

Read: 10 Ways To Bounce Back From a Heavy Spending Month on Your Credit Card
See: What Not To Do While Trying To Get Out of Debt

“Yes, the prices have surged drastically for the holiday season, and 2021 might be the most expensive Christmas ever,” said Jessica Kats, e-commerce and retail expert at Soxy. “However, this is not stopping shoppers by any means.”

Part of that can be attributed to what the NFR is calling a national “savings buffer” of $2.5 trillion, which came from people banking both their stimulus payments and whatever money they didn’t spend on travel and entertainment during the pandemic.

While healthy savings is part of the reason that people are spending more than ever this winter, another part is that it’s easier than ever to borrow money.

Budgeting 101: How To Create a Budget You Can Live With

This Will Be the Christmas of Debt

In October, one in three people weren’t financially prepared for the holidays and one in four planned to take on debt to get through them, according to research from Credit Karma. But by the end of November, CNBC was reporting that more than half of consumers — double the percentage from just one month earlier — expected to enter the new year with holiday-related debt.

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One of the biggest factors driving an increase in borrowing is a new and trending payment format that’s proving to be exceptionally useful in coaxing dollars out of wallets. There’s ample evidence that the arrival of popular “buy now, pay later” services has lulled consumers into spending more than they would have if they didn’t have the option of stringing out purchases into interest-free payments.

“A major new incentive is programs like Afterpay, where you purchase an item for its full price but make smaller payments toward it,” said Victoria Wildhorn, a sleep health specialist in the consumer goods industry — and an admittedly avid shopper. “For example, I bought a $99.99 NFL jacket from HSN, but I’m making four payments of $25 each. These programs are more widely available this season, and can be used on products of all price ranges. From a financial standpoint, I wouldn’t recommend this option to consumers struggling with financial management as it can surely create more debt.”

More debt is the last thing most shoppers need. According to CNBC, one in three shoppers were still paying off last year’s holiday heading into Black Frida 2021.

Find Out: 50 Ways You’re Throwing Money Away

But for Many Shoppers, It’s Been Business as Usual

There has been no shortage of fear-mongering all season long about rising prices, dysfunctional supply chains, empty shelves and understaffed stores.

For many, however, that has simply not reflected the realities on the ground.

“Are prices rising as dramatically as news reports would have us believe? I haven’t felt it in the way I’ve seen on the news,” said Sally Gibson, founder and owner of holiday/celebration/party planning site Someone Sent you a Greeting. “I definitely think some prices have risen, and in certain areas, but it hasn’t been across the board nor has it reached the levels that I have seen predicted. My Christmas shopping at the moment looks to be fairly similar to last year with only modest increases in certain areas.”

Make Your Money Work for You

Far from being forced to take on extra debt, some even think that things have improved thanks to an extended shopping season.

“I actually think it’s been a better year for holiday shopping,” said Janell Poulette, who has been sharing deals, time-saving tips, and recipes at since 2009. “Many stores started their Black Friday deals a lot earlier than normal so you didn’t have to wait to shop.”

Read More: 30 Ways To Dig Yourself Out of Debt

But Inflation Has a Way of Hiding in Plain Sight

Gibson’s and Poulette’s experience is not unusual, but just because prices don’t appear to be rising, inflation can be disguised in the form of smaller packages.

“I have seen a lot of shadow inflation when you get fewer products or services for the same or higher price,” said Tiffany Grant, owner of Money Talk With Tiff.

One solution is to buy moments instead of stuff.

“This year, my family and I will focus on experiences vs. things this holiday season,” Grant said. “We will take a low-cost trip to make memories we can carry with us forever, especially after so many people lost loved ones.”

Be Aware: What Not To Do While Trying To Get Out of Debt

Either Way, Today’s Buyers Are Much More Thorough in the Pre-Purchase Phase

One way that consumers are working to avoid debt this year is by making sure to make the right purchase from the right buyer at the right price — and to get it right the first time. It’s clear now that buyers are becoming more strategically savvy — especially before they click the “complete purchase” button.

Make Your Money Work for You

“Review interaction is up by 50% from pre-pandemic levels,” said Chris Campbell, CEO of customer-engagement software ReviewTrackers. “It’s one of the many signs demonstrating consumers’ heightened sensitivity about where to go or what to purchase in the wake of the pandemic. Consumers are checking out online the best local reviews for restaurants, hotels, and grocery stores when budgeting for holiday spending.”

But that’s far from the only debt-avoidance strategy the experts are seeing.

“Shoppers are continuing to get savvier,” said AJ Silberman-Moffitt, senior editor at the digital marketing firm Tandem and a 20-year veteran of Black Friday shopping. “Many people are visiting brick-and-mortar stores to see items in person but are going back home or using their phones to order these same products online.”

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