We’re Poised For a Costly Holiday Season: 31% of Consumers Plan To Spend More This Year Than Last
The holidays were a muted time for many last year. Amid the pandemic, many avoided holiday travel and gatherings became virtual rather than in-person. A side effect of a scaled-back holiday season in 2020 is that many Americans spent less than they typically do during what is often the most costly time of year. But this, year consumers expect to ramp spending back up.
Here’s a look at why spending is likely to surge this holiday season.
31% of Consumers Plan To Spend More in 2021
Almost a third of American consumers expect to spend more during the 2021 holiday season than they did in 2020, a recent TD Bank survey found. So, what’s driving these increases?
“After experiencing the holidays last year under lockdown and social distancing protocols, many people are eager to host family or attend holiday celebrations in-person this year,” said Mike Rittler, head of retail card services at TD Bank. “In fact, our survey found that among those who expect to increase their spending this season, more than a third (36%) said they’ll be spending more to host holiday festivities and 34% said they’ll be spending to update/outfit their house prior to hosting.”
The cost of getting a home holiday-ready can vary greatly from one household to the next.
“For some families, this may mean updating their décor or completing last-minute home improvement projects,” Rittler said. “It could also include spending on catering or cooking, and other expenses to make family and friends comfortable over the holidays.”
In addition, many consumers plan to spend more on gifts for friends and family.
“Seventy-one percent of respondents who expect to spend more this year say they’ll increase spending on gifts,” Rittler said. “Anecdotally, this could be because more gifts may be delivered in person this year.”
We’ve Got You Covered: GOBankingRates’ Smart Holiday Spending Guide
Consumers Will Be Making Large Purchases — and Want Financing Options
As people prepare to host gatherings in their homes, many are making large investments in home improvement projects and furniture items. Some will even be getting a head start on seasonal purchases by investing in lawn and garden updates ahead of possible shortages in the spring.
Because so many consumers plan to make large purchases this holiday season, many will be seeking financing options. Nearly half (46%) of consumers report they are more likely to purchase from retailers who offer a variety of financing options, like installment loans and credit cards. Additionally, the TD Bank survey found that 78% who used financing for their last purchase said the ability to finance affected the amount they were willing to spend.
“For shoppers, the ability to finance can help them access big-ticket purchases in a way that suits their budget,” Rittler said. “Our survey found that the primary reason consumers seek financing is to set a monthly payment and pay for their purchases over time. With the economic uncertainty brought on by the pandemic, the ability to finance a major purchase can help consumers stabilize spending and budget effectively.”
Although financing a major purchase can be helpful to consumers, it does require discipline and responsible behavior.
“As with any loan or line of credit, consumers must ensure they responsibly manage any financing secured through a retailer or financial institution, and make their payments on time,” Rittler said. “If used responsibly, some financing solutions can be a solid tool for building credit and gaining access to the products they want in time for the holidays.”