By Emma Nitzsche
After a year of quarantine, lockdowns, and canceled plans, masks are starting to come off, and Americans are spending big in celebration, taking on debt to do so.
Thought of as a ‘survival reward,’ Americans plan to spend millions of dollars at restaurants, movies, gyms, concerts, and boutiques in what has been dubbed revenge spending. As a result, many consumers are prepared to take on an increased amount of debt to supplement the celebratory splurge.
During the pandemic, the personal savings rate soared, and credit card balances began to fall. Canceled activities forced people to stay inside and save money. Add unemployment and stimulus checks into the mix, and many Americans are confident they have money to spend. Even with the increased amount of savings, Americans are preparing to dip into debt this year.
A Creditcards.com survey found that 44% of Americans said they are willing to go into debt to treat themselves after the pandemic. Over half of Millennials and Gen Z surveyed believe that debt is necessary to celebrate after sacrificing so much in the previous year.
Most Americans are willing to accrue debt in automobile spending, home renovations, and travel. Travel destinations such as Disney are experiencing mile-long lines because of the high customer demand.
As spending has increased, so have credit card interest rates. The average credit card now charges over 16% interest, which can quickly devastate chronic over-spenders.
NBC’s senior business correspondent Stephanie Ruhle urged consumers to prioritize their needs and keep their values front and center.
“It’s OK to want to spend because you’ve been feeling deprived for the past 14 months.” Ruhle told Yahoo News, “Just set a budget and let yourself do it – within reason.”
Some helpful tips include going on a cash diet, putting a 24-hour pause on purchases to see what expenses are necessary, and setting a splurge budget.
