With the holiday season fast approaching, many American’s may begin stressing over balancing their financial situation with the plans and expectations of the holidays. From buying costumes and candy for kids on Halloween, to presents and dinner on Christmas, the last quarter of the year is full of financial expectations.
Rise of Debt in 2014.
Unfortunately, the 2014 holiday season does not look promising for consumers. While consumers paid off $32.5 billion in credit card debt by March of this year, $28.2 billion was charged by June. The June amount erased 86% of what was already paid off by March.
The second quarter also raised the average household credit card balance to $6,802 and is expected to rise by the end of the year to $7,000. This puts credit card debt closer to the tipping point. The tipping point is when people are unable to make credit card payments and start becoming delinquent.
Credit card debt is expected to hit $54.8 billion, 41% higher than in 2013. This will not be helped by the holiday season, when consumers typically spend the most of any quarter. General spending trends have consumers paying off their holiday season debt by the first quarter of the next year, which did not occur in 2014, leading to higher debts.
Some of the increase in spending may be attributed to the rise in the economy, leaving less people strapped for cash than before. Debt management may not be taken as seriously as prior years as some individuals have a higher income.
Paying off debt is important to prevent your family from entering into bankruptcy. With the holiday season, families may feel an expectation to spend over their means, but it does not need to be so. Consult with a bankruptcy attorney before the holiday season if you are concerned with what holiday spending may do to your finances.