Survey: Holiday Debt Putting a Strain on the New Year

Did you know that the average American will spend more than $2,000 this holiday season? A recent study from digital personal finance firm Achieve, conducted by Talker Research, confirms that the holidays are anything but cheap.

The survey of 2,000 Americans who celebrate a winter holiday examined the cost breakdown of the holiday season—as well as how Americans have been impacted by 2024's financially challenging climate. According to the results, the most expensive holiday category is transportation, as those planning to travel this year (64%) will spend $846 on average.

"Putting on" or hosting the holidays is the next largest expense, with respondents reporting they'll spend $658, on average, in this category. The most expensive items included purchasing holiday food and refreshments ($155), throwing parties ($123) and holiday clothing and outfits ($107).

The gifts category is next on the list, with Americans planning to spend an average of $560 on their loved ones this year, with the most money being spent on kids ($117) and partners ($92).

Shifting focus to the broader economic environment, the majority of respondents (61%) felt that 2024 was in their top five most financially challenging years ever. In the survey, 81% reported having personal debt in 2024. Among these respondents, 38% reported their debt increased this year, while 44% said their debt stayed the same and 18% said their debt decreased.

Possibly because of this, more than four in 10 Americans (43%) were "going lean" and planning to spend less this year compared to years past. Stress was also a significant factor when thinking about the holidays, with 65% stating they are stressed about their holiday spending this year and 73% indicating their financial stress takes away from their enjoyment of the season. For nearly one in five (17%), their financial anxiety completely ruins their enjoyment of the season.

Looking ahead, a fifth (20%) believe they won't financially recover from the 2024 holiday season until May 2025 or later. When looking at how they will pay for the holidays, respondents reported that a fifth of their holiday expenses (20%) will be put on a credit card. In fact, 28% already have or plan to open a new line of credit to cover their holiday spending. According to the research, 37% of those who celebrate the holidays have gone into debt in years past. Nearly one in five (17%) think it's likely they'll go into holiday debt this year.

Examining how debt influences everyday spending, respondents said they've spent more on groceries (48%), rent or mortgage payments (30%), insurance (29%), medical expenses (26%) and daily transportation (26%) in 2024 compared to 2023. When looking at areas to trim to make ends meet, Americans have spent/contributed less to their discretionary spending (39%), emergency savings (26%), retirement savings (20%), gifts (31%) and travel (25%) in 2024 compared to 2023.