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With the holiday season in full swing for many Americans, consumer spending is ramping up, and along with it, the consideration of holiday debt is becoming a key factor for many households, per CivicScience data. As of October, 14% of holiday shoppers say they plan to take on any amount of debt to buy holiday gifts this year (excluding those who answered ‘I’m not sure’). This is equivalent to last year (14%) and up slightly from 2022 (13%).
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Taking on holiday debt largely influences other holiday shopping behaviors. Those who plan to take on holiday debt this year are more likely to be doing the following compared to those not taking on debt:
- Purchasing gift cards: Nearly 9-in-10 are at least ‘somewhat likely’ to purchase gift cards for gifts this holiday season, compared to roughly 6-in-10 among those not taking on debt.
- Starting holiday shopping early: It’s no surprise that those who plan to take on debt are starting their shopping early to take advantage of early sales, such as Amazon’s October Prime sale. Just over half of those taking on debt have done at least some of their holiday shopping (54%), outpacing those who aren’t taking on debt (35%).
- Buying gifts online: Nearly 90% will do at least some of their shopping online, compared to roughly 80% of those not taking on debt.
- Spending more: Fifty-three percent say they intend to spend ‘more’ this holiday season compared to last season. Whereas just 21% of those not taking on debt say they plan to spend ‘more.’
- Traveling this holiday season: Those taking on debt are much more likely to travel this holiday season, which is likely part of why they expect to take on debt.
How Buy Now, Pay Later Factors Into Holiday Shopping Plans
Buy Now, Pay Later programs are one way consumers could take on holiday debt. Nearly a quarter of those holiday shopping this year have experience using BNPL services in general, and another 10% intend to use them (both of which double the percentage who don’t holiday shopping). As expected, data show that online holiday shoppers are more likely to be BNPL users.
But while CivicScience data tracking shows that the percentage of Americans who’ve used these types of programs has increased over the last few years, it may now be reaching a plateau. Usage sat at an average of 24% in Q3, the same as in Q3 2023. At the same time, slightly fewer people intend to use them compared to Q3 in 2023, and slightly more are not interested in using them.
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Likewise, when it comes to expected usage among this year’s holiday shoppers, recent data indicate a decline in the percentage intending to use Buy Now, Pay Later services this holiday season. Thirty-two percent of holiday shoppers say they’re ‘less’ likely to use BNPLs this holiday season compared to last, which outpaces the 23% who say they’re using them ‘more’ (the remaining 44% say they’re equally likely to use them).
The data represent a bigger shift in how people are shopping. Additional CivicScience data show that more people are using debit cards to finance their holiday purchases this year, and fewer are using credit cards, hinting that people could be more judicious in their spending this year.
Gen Z and Millennials are far more likely to use BNPLs this holiday season, with those aged 18-24 driving BNPL usage perhaps due to student loan debt repayment concerns. Whereas, those 45+ are far less likely to use these types of services this year.
As the holiday season unfolds, many Americans are balancing the joy of giving with the reality of financial strain. With 14% of holiday shoppers planning to incur debt – consistent with last year – it’s clear that spending will be shaped by financial considerations. For example, consumers are embracing early shopping, more online purchases, and deals and promotions. While Buy Now, Pay Later services are still a part of the holiday shopping ecosystem, data suggest that slightly fewer may turn to BNPL this year to finance their holiday purchases.
