Retailers are looking for ways to get you to spend your money, rolling out deals weeks ahead of the official start of the holiday shopping season.
In a year when budgets are already strapped, saving money is at the top of mind right now.
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“It’s all about the deals,” Natalie Richards, a shopper in Pembroke Pines told NBC6. “That’s all I shop.”
Ted Rossman, a senior industry analyst for Bankrate, said prices have gone up 20% since the beginning of 2021 and wages have only gone up an average of 17% since then.
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“So even though inflation has come down … the prices are still growing,” he said. “They’re just growing more slowly.”
Rossman said higher prices have led many to take on credit card debt in recent years.
“Those balances are at record highs,” he said. “They’re up about 50% since early 2021.”
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The average credit card interest rate is at a staggering 20.4%. A recent Bankrate survey of more than 3,500 people nationwide found nearly two in five credit card holders have maxed out a credit card since the Federal Reserve started raising interest rates over two years ago. Bankrate also found only one in four holiday shoppers plans to spend more this year than they did last year. One in three plans to spend less.
“Half of cardholders already have credit card debt,” Rossman said. “The average amount is $6,400, according to TransUnion. If you add $1,000 in holiday debt on top of that, it just makes it that much harder to pay off. So these are all reasons why we are seeing more of a frugal shopper this year.”
To avoid overspending, consider making a budget and sticking to it. If you don’t have a holiday fund saved up, consider gifts you can make – food is always a popular option. And be careful with buy now, pay later offers.
“Essentially, you’re buying stuff that you can’t afford,” said Howard Dvorkin, chairman of Debt.com. “The problem is if you default or don’t pay one of those months, all of a sudden … they’re charging you 30% or more interest on this, so that deal you thought was a great idea, it’s not such a great idea.”
New Year’s resolutions are right around the corner, so consider prioritizing paying off those high-interest credit cards in 2025. Experts say you may want to start looking into different options now, like zero-interest balance transfer offers or working with a reputable non-profit credit counseling agency, to help you kick start that goal in a few weeks.
