A new survey finds Canadians will spend an average of $675 this holiday season despite the fact that millions have not paid off their purchases of last year’s Christmas presents.
A NerdWallet Canada survey of more than 1,000 Canadian adults found that more than 30 million Canadians (82 per cent) plan on spending an estimated $20.5 billion (an average of $675 per shopper) on gifts this holiday season.
But spreading Christmas cheer isn’t coming without its share of anxiety for shoppers, as 74 per cent say inflation and economic uncertainty are making them wary of overspending on gifts. The survey found 36 per cent plan on spending less per person than last year, while 27 per cent will be giving gifts to fewer people.
Most shoppers (59 per cent) plan to use a credit card, with 32 per cent saying they will make all purchases with plastic, while 50 per cent expect to use cash or debit for purchases. Another 10 per cent will use a digital wallet for their shopping.
More than half (55 per cent) of Canadians incurred credit card debt during the 2021 holiday season, with 20 per cent – approximately four million people – saying that debt is still not paid off. Twenty-eight per cent of millennials (ages 26 to 41) who incurred credit card debt during the 2021 holiday season say they still have not paid off their balances, compared to 13 per cent of baby boomers (ages 58 to 76).
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Most of those who incurred credit card debt during last year’s holiday season quickly erased it. Almost half (47 per cent) say they paid off their credit card balance with the first statement, while 22 per cent did so within one to three months. It took between four months and a year for 12 per cent of those who incurred credit card debt during last year’s holiday season to pay it off.
Unpaid credit card balances can be costly. Let’s say someone charges this year’s estimated average holiday spend, $675, to a credit card with a typical interest rate of 19.99 per cent. If they make only minimum payments of three per cent each month, it would take them 50 months to pay off that balance entirely. They’d pay $318.20 in interest for a total cost of $993.20.
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