In a new survey of 1,147 American adults conducted by MagnifyMoney, more than one in four (26%) Americans said they plan to rack up holiday debt during the 2016 holiday season that will linger more than a month. Among the 26% who will rack up debt, 66% expect they will take three months or more to pay off the debt.
Holiday debt can quickly spiral out of control. MagnifyMoney found the average shopper surveyed who added debt during the 2015 holiday season racked up $1,073.
Using a credit card with average APR of 16% and making monthly minimum payments of around $25, it would take that person more than five years (61 months) to get out of debt, according to MagnifyMoney’s Credit Card Payoff Calculator. Over that time, he or she would pay an additional $496 worth of interest charges.
Nearly one-third (32%) of this year’s survey respondents said they incurred holiday debt during the 2015 shopping season. People who took on holiday debt in the past are much more likely to take on debt this year because they can’t afford to pay cash, our survey found, with 74% saying they will incur debt this year. They are also more likely to feel financially stressed.
Among those respondents who incurred credit debt during the holidays in 2015 , the average shopper added $1,073 of holiday debt. And a staggering 74% said they will likely take on more credit debt again this year.
More debt = more financial stress
More than half (59%) of respondents who took on debt over the holidays in 2015 said they accumulated $500 or more of debt. Among people who said they racked up $500 or more in holiday debt in 2015, MagnifyMoney found greater trends of financial stress and a greater likelihood of incurring additional debt in 2016.
MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.
Check out the infographic below for the full survey results: