Holiday season

Americans continue to go into credit card debt this holiday season – Footwear News

More Americans have taken on debt this holiday season than in 2020, according to a new survey from LendingTree.

From making travel plans to buying gifts for loved ones, more than a third of U.S. consumers (36%) have taken on vacation debt this season, up from 31% in 2020. This year, borrowers must averaged $1,249, down 10% from $1,381 last year. season, LendingTree found.

And while most debt-ridden holiday borrowers put it on their credit cards (62%), nearly 40% of Americans used buy now, pay later (BNPL) financing for holiday gifts this year. . That’s a slight increase from 37% in 2020, LendingTree reported. Interestingly, this type of funding was most common among parents with young children (64%), six-figure earners (61%) and millennials (60%).

But BNPL is not without flaws. As this form of financing has become more popular across America, concerns about debt accumulation, regulatory arbitrage and data collection have led the Consumer Financial Protection Bureau (CFPB) to survey providers from BNPL Affirm, Afterpay, Klarna, PayPal and Zip this month. .

BNPL credit is a type of deferred payment option that typically allows the consumer to split a purchase into multiple installments, usually four or less, often with a 25% deposit due at checkout. The application process is quick, involving relatively little information from the consumer, and the product is often uninspiring. Lenders touted BNPL as a safer alternative to credit card debt, as well as its ability to serve consumers with limited or subprime credit histories.

The CFPB orders are intended to illuminate the range of these BNPL products and their underlying business practices.

By the end of the holiday season, Americans are on track to have $70 billion more in credit card debt according to WalletHub and balances are expected to rise further in 2022 to $805.7 billion. according to a separate TransUnion forecast.

The news comes as holiday retail sales have increased this year, suggesting pandemic concerns have not wiped out strong consumer demand this holiday season.

Between Nov. 1 and Dec. 24, U.S. retail sales grew 8.5% year-over-year, according to data from Mastercard SpendingPulse, which tracks retail sales through Mastercard payments. and survey-based estimates for cash and check payments. Sales increased by 10.7% compared to 2019.

In-store sales were up 8.1% from 2020 as shoppers returned to physical stores this year. Online sales were up 11% year-over-year and 61.4% from 2019 and accounted for 20.9% of total retail sales this year.

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