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Understanding the Holiday Debt Hangover

As the festive season of 2025 approaches, a survey conducted by Consolidated Credit reveals a concerning trend among Americans: a significant number are still grappling with the financial fallout from last year's holiday celebrations. This ongoing debt is not merely a personal issue; it reflects broader concerns regarding consumer stress and budget constraints accompanying the holiday season.

In what has been termed the "holiday debt hangover," many families are entering the next holiday season with mounting debts from celebrations past. The survey indicates that approximately 36% of respondents are still carrying balances from their Christmas expenditures of 2024, leading to a challenging balancing act as they prepare for upcoming seasonal expenses.

April Lewis-Parks, Director of Education at Consolidated Credit, emphasizes that these lingering debts signal deeper financial issues. Families already burdened with debt may find themselves anxious as they navigate the pressures of the holidays with scant resources. With inflation remaining high and increased reliance on credit, these financial stakes feel higher than ever.

Enrollment in credit-driven spending habits seems pervasive, with a staggering 69% of respondents confirming that they utilized credit cards to cover last year's holiday costs. Moreover, around 20% resorted to buy-now-pay-later (BNPL) arrangements, highlighting a growing trend towards immediate gratification despite potential long-term consequences. As we edge into the holidays of 2025, about half of consumers foresee reliance on credit cards again, while 36% plan to exercise more caution by using only cash or debit—a notable shift towards prudent spending in the face of economic uncertainty.

The Emotional Toll of Debt

The emotional ramifications of carrying holiday debt are evident. For many, anticipating another holiday season while still encumbered by debt can be overwhelming. Women, in particular, report heightened levels of stress.

• - 39% of respondents feel light to moderately stressed about holiday-related debt.
• - 19% indicate that their stress level is high to extreme.
• - 64% express worries about inflation and price hikes.
• - 31% are concerned about overspending.

These statistics collectively unveil the psychological burden that financial strain imposes, illustrating that this issue transcends mere holiday shopping habits—it points to a significant shift in the consumer financial landscape.

A recent Deloitte survey echoes this sentiment, predicting a 10% decline in holiday spending this year amidst rising inflation and economic uncertainty. A staggering 77% of consumers anticipate that prices on seasonal items will climb further, reinforcing cautious financial outlooks.

A Call to Action for Consumers

So what can consumers do as they approach another holiday season weighed down by debt? Consolidated Credit offers several practical strategies:

1. Create a Realistic Holiday Budget: Set clear financial limits and adjust your expectations accordingly, especially if previous year's debts remain unpaid.
2. Limit High-Interest Credit Use: Be selective about using credit and BNPL schemes; develop a clear repayment strategy before accruing more debt.
3. Focus on Paying Down Existing Debts: Tackle holiday debts from previous seasons before taking on new expenses.
4. Embrace Financial Resilience: Use this festive period to cultivate financial stability instead of merely surviving the holidays.

About Consolidated Credit

Consolidated Credit stands out as a non-profit organization with a steadfast mission to address consumer debt issues. By guiding families across America through financial challenges for over 30 years, it has played a pivotal role in empowering individuals to master their finances through education and counseling.

As we engage with the upcoming holiday season, the findings from this survey illuminate the pressing need for consumers to reevaluate their spending habits and embrace new strategies that prioritize financial well-being. The lessons learned today could significantly impact financial health in the years to come.