Upcoming Holiday Spending and Debt Statistics for 2022

Before and during the holiday season is prime time for commercial collections as small businesses seek to recoup money they’re owed by customers who fail to repay their debts. And this year appears to bring more of the same, considering74% of consumers plan to spend the same or more than they did last year.

In anticipation of the upcoming holidays, consumers are cutting back on discretionary spending on luxuries like streaming services, apparel, and dining out. If last year is any indication, debt collection agencies are forecasting a surge in past-due debt by the end of the year as consumers attempt to stretch their budgets.

Holiday Outlook for 2022

Financial data shows that millennials are leading the holiday spending in 2022, based on their overall predictions found in PwC’s Holiday Outlook 2022 market report of potential average spend amounts:

• Millennials — $1,823
• Gen X — $1,594
• Boomers — $1,199
• Gen Z — $1,104

A whopping 35% of shoppers expect to spend more than they did last year, inevitably boosting the need for collection agencies for small businesses. The big spenders tend to be young men living in metropolitan areas, and it appears they’ll spend most of their money on family and themselves — more so than the average holiday shopper.

Interestingly, it’s millennials again who are projected to spend more (11% more) during this holiday season than last year. More still, this age group is 63% more likely to travel during the end of the year than the rest of the consumers.

That said, there are a number of festive shoppers who are acutely aware of inflation. While they’re closely watching rising prices this year, inflation has only slightly affected buying. 65% of shoppers said price is one of the top three factors influencing their spending, compared to 75% at the same time last year.

“Big Savings” gimmics often get the best of unsuspecting shoppers, who actually end up spending more than they otherwise would in order to “make the most” of the deals. This is one of the reasons why commercial collections tend to ramp up during this time of year.

Brief Look at 2021’s Holiday Debt Stats

According to a MoneyGeek survey, the average per-person holiday spending during the holidays in 2021 was $1,131. And while most people regretted spending that much, several shoppers wished they’d spent more.

65% of people used credit cards to fund their holiday spending. Reports suggest that the more credit cards consumers owned, the more they financed with their available balances.

Sadly, this meant that by February 11, 2022, around 40% of United States of America citizens hadn’t repaid their holiday credit card debt, sparking a surge in the use of collection agencies for small businesses.

Debt Projections for 2022

Inflation has become an international problem, spanning nearly every part of the globe. Consumers have come to expect higher prices than this time last year — roughly nine in ten people expect more expensive services as well.

Steady increases in the Consumer Price Index disproportionately affects those in low-income brackets, raising the likelihood of going into debt to “afford” buying gifts.

Consumers can reduce the likelihood of facing debt collection agencies this holiday season by sticking to these basic principles:

• Pay debt off as soon as possible — This is the best way consumers can avoid commercial collections. Paying off their holiday debt as soon as possible reduces the chances of the ever-feared debt cycle.
• Budget — The key is to plan for holiday spending all year. That way, consumers can stave off the panic as festivities kick up a notch. 
• Separate savings for holiday spending — Once a budget is set, financial advisors suggest putting consumers put their holiday money in a separate place to discourage overspending.
• Understand credit — Credit cards can be great financial tools, provided they’re utilized wisely.

Overspending for the holidays can lead to unwanted interactions with a debt collection agency but consumers can mitigate these risks by budgeting for the festive period.