Holiday shoppers plan to spend more money in 2021 after 2 years of decline, says TransUnion
This year, holiday shoppers plan to spend more money, buy earlier and try out new retailers due to possible inventory shortages, according to TransUnion 2021 Consumer Vacation Shopping Report.
About 3 in 4 consumers are considering rethinking their holiday shopping strategy due to supply chain issues – a third of survey respondents (33%) are shopping earlier this year, a quarter (25%) are considering alternative gifts and 14% could make less holiday shopping. .
Compared to last year, there is a 22% increase in the number of respondents who want to spend more on holiday shopping in 2021 after two consecutive years of decline during the coronavirus pandemic. In addition, 15% more consumers plan to use the credit for their purchases.
If you plan to borrow money to finance your vacation shopping, it’s important to compare your options. Read on to learn more about seasonal spending credit and compare your credit card and personal loan options for free on Credible.
70% OF AMERICANS EXCEED BUDGET DURING HOLIDAYS, SURVEY
3 ways to borrow money for holiday shopping
The best way to pay for discretionary spending on your shopping list is to budget and save up front, but the holiday season has a way of sneaking up on even the most proactive consumers. Before you know it, it’s November, then Black Friday – and December is just around the corner.
If you are planning to borrow money to pay for Christmas presents, a Thanksgiving dinner, or plane tickets to visit your family, consider these options:
- Open a credit card with a 0% APR introductory offer
- Use a shop now, pay later
- Borrow a fixed rate vacation loan
Learn more about each financing plan in the sections below.
THIS IS THE UNIVERSITY DIPLMA THAT REALLY DELIVERS, ANALYSTS FIND
1. Open a credit card with a 0% APR introductory offer
Putting vacation purchases on a credit card can be a quick way to rack up more high interest debt that you can’t pay off. The average interest rate on credit card accounts estimated at 17.13% in the third quarter of 2021, according to the Federal Reserve.
However, it may be possible to forgo paying interest entirely if you can open a credit card with a 0% APR introductory period. These offers are only for creditworthy borrowers with good credit scores i.e. a score of 670 or higher using the FICO scoring model.
Interest-free purchase periods are typically 12, 15, or 18 months. When the offer expires, the credit card issuer will charge interest on the remaining balance. But if you are able to meticulously plan your vacation expenses, it is possible to pay off the balance you have accumulated long before the 0% APR period ends.
Visit Credible to compare interest rates, terms and offers between credit card issuers, some of which may offer a 0% APR period. Viewing offers will not impact your credit score.
HOW TO HELP YOUR ADULT CHILDREN BUILD THEIR OWN CREDIT
2. Use a shop now, pay later
If you’re among the vast majority (83%) of consumers who plan to do at least half of their holiday shopping online this year, according to TransUnion’s survey, then you may be familiar with a growing financing option. called “Buy now, pay later” (BNPL). This service offered at checkout allows buyers to divide their purchases into several installments on a defined repayment plan.
This financing option has its advantages: many BNPL companies do not require a credit investigation and do not even charge interest. Additionally, BNPL financing is available at checkout from many major online retailers like Amazon and Walmart, making it it is an accessible and practical option.
However, BNPL has its drawbacks. Some companies, like Affirm, charge up to 30% APR as part of their financing agreements. Most companies will charge late payment fees and may even report you as a delinquent to the credit bureaus if you don’t pay on time.
Vacation buyers who plan to buy now and pay later to finance their purchases should read the payment plan terms and conditions carefully to avoid fees, excessive interest, and negative impacts on credit.
SEPTEMBER IS LIFE INSURANCE AWARENESS MONTH: ARE YOU ENOUGH COVERED?
3. Borrow a fixed rate vacation loan
A Vacation loan is another name for a personal loan used to finance vacation expenses. Personal loans are lump sum loans that you pay off in fixed monthly payments over a set period of time.
Compared to credit cards, personal loans have low fixed interest rates and predictable payment plans. While credit cards have an average interest rate of 17.13%, the average rate for a two-year personal loan is 9.39%, by the Fed.
You can also consider using a personal loan to consolidate credit card debt that you accumulated while on vacation. A recent analysis by Credible found that creditworthy borrowers have the opportunity to save nearly $ 2,400 in interest by consolidating their debt into a personal loan.
Consult the estimated interest rate of your personal loan for free on Credible and use a personal loan calculator to estimate your monthly payment.
ONLINE MORTGAGE CLOSING MAY SOON BECOME LEGAL IN ALL OF THE UNITED STATES
Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.