Holiday spending in 2024 will be cautious and strategic, with many consumers planning to tighten their belts. According to a Bankrate survey conducted by YouGov Plc in August 2024, shoppers are rethinking how much they will spend on gifts and other holiday-related purchases.
Bankrate’s survey, which polled 2,300 U.S. adults, including 1,789 holiday shoppers, provides key insights into consumer behavior ahead of the holiday season. A notable one-third of shoppers are planning to reduce their holiday expenditures this year, which is a direct reflection of the broader economic environment and inflationary pressures.
While 43% of shoppers plan to maintain their spending levels from 2023, only 25% expect to increase their holiday budgets.
Hesitancy to ramp up spending shows a general mood of caution. Many consumers are actively considering ways to control costs while still participating in the holiday festivities.
Holiday budgeting revealed
A closer look at consumer spending intentions shows a spectrum of approaches. One-third of U.S. shoppers plan to cut back on holiday expenses, a clear signal that many are feeling the impact of higher living costs. This contrasts with the 25% of shoppers who plan to spend more, possibly reflecting those with higher disposable incomes or shoppers focused on catching up after previous years of restraint.
The 43% who intend to spend the same as last year highlight a sense of stability for some, despite ongoing economic concerns. This group represents a segment of consumers who may be adapting to inflationary pressures by maintaining their holiday budgets without overspending.
Inflation is shaping 2024 holiday budgets
While inflation has slowed from its peak in previous years, it still lingers, affecting household budgets across the U.S. Consumers continue to grapple with rising prices, even if they are increasing at a slower rate.
Ted Rossman, a senior industry analyst at Bankrate, points out that the cumulative effect of price hikes is taking a toll on household spending power. In fact, over the past three years, household costs have risen by 20%, significantly reducing disposable income for many families.
Inflation is being felt in holiday shopping plans, with 34% of consumers saying that inflation will change how they approach their holiday shopping this year. It aligns with the 28% of holiday shoppers who report feeling stressed about the cost of holiday shopping, up from 25% in 2023.
28% of shoppers say that holiday spending will strain their budgets, compared to 23% last year.
Shoppers plan their holiday deals well before December
Holiday shoppers in 2024 are starting earlier than ever, with many looking to avoid last-minute rushes and maximize savings. Almost half of U.S. holiday shoppers are planning to begin their shopping before Halloween, giving themselves ample time to search for the best deals and spread out their expenses over a longer period.
Here’s how early shoppers are planning their holiday purchases:
- 12% had already started by August 31.
- 13% plan to begin in September.
- 24% are set to start in October.
- 37% are targeting November.
- 15% will wait until December.
According to Ted Rossman, early shopping provides consumers with the flexibility to compare prices and take advantage of sales, offering a way to mitigate the impact of rising costs. It’s a strategy that aligns well with the cautious spending attitudes seen this year.
The go-to payment choices for 2024
Consumers in 2024 are not just being strategic about when and how much they shop, but also how they plan to pay for their purchases. Payment preferences reveal an interesting shift toward debt avoidance, with 58% of shoppers planning to use debit cards, making it the most popular method for holiday shopping.
48% of shoppers prefer to use cash, reinforcing the theme of controlled, upfront spending.
Only 34% of shoppers plan to use credit cards that they intend to pay off in full, reflecting a focus on maintaining good financial standing. Meanwhile, 19% of consumers plan to spread out their credit card payments over multiple billing cycles, indicating that some are willing to take on short-term debt to finance their holiday purchases.
Buy Now Pay Later (BNPL) services continue to gain traction, with 11% of shoppers planning to use these services in 2024. BNPL offers flexibility for those who want to break their purchases into smaller, interest-free payments over time, appealing to a segment of shoppers seeking to manage cash flow without relying on traditional credit.
Usage of varied payment methods shows the diversity in consumer financial strategies this holiday season, as shoppers navigate rising prices and their personal budget constraints.
