The holiday shopping season might feel festive right now, but a growing number of Americans are bracing for a financial hangover that could last well into the new year.
A survey of 2,000 Americans commissioned by Affirm and conducted by Talker Research paints a sobering picture of post-holiday finances. Among Americans who celebrate a winter holiday, 35% plan to use credit cards for seasonal purchases. That is not necessarily a problem in itself. The situation is more concerning because only 17% of credit card users report always paying their bills in full to avoid interest charges.
The debt that keeps on giving
The math is not pretty. A full 70% of credit card users surveyed expect to carry a balance into 2026, and nearly one in five anticipate still paying off their holiday purchases come June or later. That means six months of interest charges piling up on gifts that were unwrapped and forgotten months earlier.
“The issue isn’t just timing, it’s cost,” said Vishal Kapoor, Head of Product at Affirm. “Credit card interest that compounds month to month can make purchases significantly more expensive over time.”
This compounding effect has already burned plenty of shoppers. According to the survey, 47% said they have been caught off guard in the past by how much interest and fees inflate the actual cost of their holiday spending.
Saving time and sticking to budgets
The survey found that 35% identify as “The Giver” type of spender, aiming to be generous while staying realistic about their budget. Another 27% call themselves “The Planner” because they make lists, set budgets, and stick to them.
AI tools are also becoming part of the strategy. Nearly half of those surveyed (44%) have used or plan to use AI for holiday shopping assistance. Younger generations lead this trend, with 60% of Gen Z and 55% of millennials turning to AI compared to just 21% of boomers.
The motivations are practical. Shoppers want to save time (46%), stay on budget (45%), and find meaningful or creative gifts (37%). Among those using AI, 89% said they trust its recommendations.
Avoiding a holiday debt hangover
Consumers wish they had clearer insight into the total cost of their holiday purchases, including interest and fees. The survey found that 44% said they would feel confident and 39% would feel relieved if they knew the total cost upfront. When asked whether they would feel more confident about spending with complete clarity on payment terms at checkout, 40% said they would feel more confident, and 32% said they would plan ahead more.
“Shoppers are telling us something simple: they don’t want holiday bills to come with surprise costs,” Kapoor noted.
Of course, there is no way for stores to calculate your total cost if you use your credit card. They have no way of knowing the interest rates or the period over which you will repay the debt. Suffice to say, that if you do not pay off completely when your bill is due, you will pay a higher cost, especially if you take months to pay off.
It’s not too late to take action.
- Set a firm budget before making any more purchases. Track your spending as you go rather than tallying it up in January.
- Save money with Rocket Money, which automatically finds and cancels unwanted subscriptions, negotiates bills down by up to 20%, and monitors your accounts for hidden fees.
- Reduce expenses on dining, travel, eyeglasses, prescriptions and more with AARP. Pay $15/year with auto-renewal and save hundreds.
- Plan to pay down credit card debt aggressively in January rather than making minimum payments. Even an extra $50 or $100 per month can significantly reduce the interest you pay over time.
- Minimize spending with more modest gifts. Explain privately to your loved ones, if need be, that you need to reduce spending.
- Offer your time instead of spending money, such as cooking a meal, babysitting, running errands, taking a long walk together or helping with a project.
Sometimes, the best present you can give yourself is financial peace of mind heading into the new year.
Sources
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