Post-Holiday Credit Card Debt
Consumers were expected to carry more cash and less plastic this past holiday shopping season. The recession had shoppers worried about post-holiday credit card debt, which was predicted to decrease 5% from the following year. Yet are you feeling the backlash of holiday spending in the form of credit card bills?
Despite the predicted cash-only holiday spending trend, half of all holiday shoppers pulled out the plastic. And one in five will not be able to pay off the debt until March or even later as this Consumer’s Report Money Blog post explains.
Those that did use the credit cards spent an average of $896 versus an estimated $699 on presents. This is clear evidence consumers still spend an average of 12-18 percent or more than planned when using plastic as a means to pay.
Parting with cold, hard cash actually hurts your brain, according to a study by researchers at Carnegie Mellon, Stanford and MIT. “Credit cards effectively anesthetize the pain of paying,” says Professor George Loewenstein, one of the researchers behind the study.
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