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The 2024 holiday season brought joy to many but left an alarming financial burden in its wake. A significant spike in credit card debt, both in the U.S. and around the world, has highlighted the economic challenges faced by consumers as they balance festive spending with rising inflation and stagnant wages.
U.S. Credit Card Debt Hits Record Levels
According to WalletHub’s analysis of Federal Reserve data, U.S. credit card debt reached a record high of $1.32 trillion in November 2024. While this figure is $118 billion below the inflation-adjusted peak of 2007, it still reflects an upward trend that has been accelerating. WalletHub estimates that credit card debt grew by an additional $90 billion throughout 2024, underscoring the pressure on households during the holiday season.
“The holidays have become a time of heightened financial strain,” said John Kiernan, WalletHub Editor. “More than 1 in 10 people say that holiday spending significantly increased their credit card debt.”
Despite the Federal Reserve’s recent rate cuts, which lowered average credit card APRs, many Americans are struggling with the cost of revolving debt. WalletHub’s survey revealed that 46% of Americans lack a plan to pay off their debt, and nearly 20% anticipate carrying even more credit card debt by the end of 2025.
A Global Perspective
The trend of increased holiday spending leading to higher debt is not unique to the United States. Countries like Canada, the United Kingdom, and Australia also reported significant rises in consumer credit card balances during the 2024 holiday season. In the UK, for example, the Bank of England noted a 7% year-over-year increase in credit card borrowing in December. Similarly, in Canada, data from Statistics Canada indicated a 5.8% rise in household debt compared to the previous year.
Inflation continues to play a critical role in driving this trend. Across the globe, consumers are finding it harder to keep up with the rising costs of goods and services, making credit cards a lifeline for essential and non-essential expenses alike.
One of the most concerning findings from WalletHub’s survey is that nearly half of Americans don’t have a plan to manage their mounting debt. This lack of a debt payoff strategy could lead to a cascade of financial problems, particularly as interest rates on existing balances remain high.
For those seeking relief, balance transfers have become a popular option. Nearly 1 in 5 survey respondents indicated plans to transfer their holiday debt to new credit cards with lower introductory APRs. However, experts caution that balance transfers are only effective if accompanied by disciplined budgeting and repayment plans.
Inflation vs. Credit Card Debt
Interestingly, WalletHub found that Americans are more worried about inflation than credit card debt, with six times as many survey respondents citing inflation as their primary concern. Inflation not only reduces purchasing power but also complicates efforts to budget effectively.
“The tension between inflation and debt management creates a challenging environment for consumers,” said Kiernan. “While people are optimistic about reducing their debt, inflation could make this goal more difficult to achieve.”
Solutions for Managing Debt
Financial experts emphasize the importance of proactive measures to address credit card debt. WalletHub offers several tips to help consumers regain control:
- Separate Everyday Expenses from Debt: Using one card for ongoing expenses and another for existing debt can help minimize interest charges.
- Leverage Balance Transfer Deals: Cards with 0% introductory APR offers can provide breathing room to pay off debt without accumulating additional interest.
- Use Rewards Cards Strategically: For everyday spending, a rewards card can yield savings if the balance is paid in full each month.
- Improve Budgeting and Saving: Free tools, such as WalletHub’s budgeting features, can help consumers track spending and prioritize debt repayment.
- Build Credit Scores: Higher credit scores can lead to lower interest rates and better credit card offers, reducing the overall cost of debt.
Looking Ahead
As the holiday season becomes increasingly associated with financial stress, the need for broader economic solutions becomes evident. Governments, financial institutions, and consumers all have a role to play in addressing the root causes of debt accumulation.
While fewer than 1 in 5 Americans believe they will have more credit card debt by the end of 2025, the reality may be less optimistic without concrete steps to mitigate financial risks. A combination of budgeting discipline, financial literacy, and systemic changes could help reverse the trend and provide consumers with a clearer path toward financial stability.
Ongoing vigilance and practical strategies will be essential as households navigate the post-holiday debt landscape, striving for a more secure financial future.
