WalletHub: Many consumers overspent this past holiday season

by Kim Souza (ksouza@talkbusiness.net) 143 views 

Roughly 93 million Americans overspent on their holiday purchases according to WalletHub’s post-holiday shopping survey. As the credit card bills begin to roll in over the next few weeks, WalletHub said 46 million consumers regret at least one of their holiday purchases. WalletHub reports 37% of people admitted overspending this past holiday season.

“Buyer’s remorse is especially common when a purchase is made on impulse,” said Paul Rose, interim dean of the School of Education, Health and Human Behavior at Southern Illinois University. “Many people procrastinate when purchasing gifts, and run out of time in December to carefully consider their purchasing options.”

The survey found 30% of respondents said spending makes the holidays happier. But only 20% said the holidays are worth racking up credit card debt. Early estimates from the National Retail Federation and Mastercard indicate robust holiday sales rising more than 5.4%. That prediction exceeds the 4% forecast by analysts.

NerdWallet reports 73% of consumers it surveyed charged some of their holiday gift purchases in 2018 even as roughly 40 million Americans were still paying off the prior year’s holiday shopping debt.

“Overspending is a chronic problem for many consumers in this country,” said Z. John Zhang, marketing professor at the Wharton School of Business at the University of Pennsylvania.

Zhang said with the strong U.S. economy and tight labor market, he does not forecast any significant drag for consumer finances or the overall economy in the coming months.

That said, WalletHub warns rising credit card debt is of concern as consumers owed $974 billion to credit card companies as of Oct. 31, 2018. Outstanding consumer debt is expected to exceed $1 trillion when the full year data is released.

NerdWallet reports consumers anticipate it will take them 3.2 months to pay off their holiday charges this year. That is one full month longer than the previous year. WalletHub found 55% of its respondents plan to retire their holiday debt in January, but 17% said they will still be paying it off beyond April.

WalletHub said consumers who overspent may have to wait before making another large purchase, but one in three consumers also plan to return holiday gifts. Clothing and electronics are the biggest two categories of returns, according to the WalletHub survey.

WalletHub also reports consumer sentiment toward their financial health in 2019 is positive with 80% expecting it to be better than 2018. Similarly, consumer credit scores are expected to peak in 2019 or soon thereafter, the survey said.

WalletHub experts said good planning is crucial to financial health.

“Savvy consumers should have a list of what they truly need or want, and wait until the best time or deal to buy it,” said Emad Abou-Elgheit, an assistant professor of marketing and entrepreneurship at the State University of New York, Plattsburgh. “When they do that, they can perceive more value of their purchases, and most importantly, feel less regret.”

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