‘Tis the gift giving season, but spending this year comes with added stress during the pandemic.
Top of your shopping list should be to avoid maxing out your plastic and racking up debt.
Shoppers said they are more conscious of what they’re spending.
“I’m going to try to not leverage any more debt. A lot of people are using Amazon, but I opted to go more small businesses this year,” said Tom Haggett of West Hartford, who hadn’t started shopping yet.
CreditCards.com industry analyst Ted Rossman said while credit card debt has been down since February, he believes the data is hiding that many households are struggling.
“If you already have credit card debt, and look, about half of people do, according to the fed, and the average is about $6,300. Try to avoid adding to it this holiday season,” said Rossman.
And while mortgage rates may be low, credit card interest rates are not.
So paying them off overtime can easily compound.
“If you make $1,000 of holiday purchases at 16% and you only make minimum payment, well you’re going to be in debt for about three years and you’re going to pay almost $300 in interest…and that’s on top of what you might already owe.”
If your debt’s been adding up, experts suggest making a budget and sticking to it.
If you still need some help, Rossman said you can look for nonprofit credit counseling to help you consolidate your payments.
“The holiday season shouldn’t be something that sets up back financially,” said Tara Alderete, the director of enterprise learning for the nonprofit Money Management International.
She said Money Management International is seeing more people reach out for help as payment forgiveness plans put into place at the start of the pandemic are winding down.
So in the spirit of giving, Rossman is adamant there are ways to celebrate safely without racking up debt.
“I think this year, really more than ever, we should have the latitude to speak up. Chances are somebody in your family or somebody in your friend group may be thinking the same way, and they may welcome the idea, you know what let’s buy fewer gifts this year.”