Holiday debt hangover: How to avoid carrying gift purchases into next year

The holiday shopping season is here, but a staggering number of people are still dealing with debt from last year's purchases. Experts call this a "holiday debt hangover," and new data shows just how widespread the problem has become.

A new survey from Consolidated Credit finds 36% of people are carrying balances from 2024 gift purchases. Nearly 70% of all shoppers used credit cards for last year's holiday spending, while another 20% turned to buy now, pay later services.

Now those same shoppers face a difficult choice: managing old debt while preparing for new season expenses.

"This isn't just about leftover balances," April Lewis-Parks said, Director of Education at Consolidated Credit. "It's a deeper sign of financial strain as families juggle inflation, credit use, and rising prices."

The emotional toll of holiday debt

Carrying debt while preparing for the new holiday season is taking a toll on people's emotional wellbeing, particularly among women who report higher levels of strain:

• 39% feel slightly or moderately stressed about holiday-related debt
• 19% say they are very or extremely stressed
• 64% are worried about inflation and rising prices
• 31% are concerned about overspending
  

How to avoid the debt hangover

Experts recommend creating a realistic budget and paying off existing balances before taking on any new debt. Financial advisors suggest setting spending limits early and sticking to cash or debit cards when possible to avoid accumulating additional credit card balances.

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