By Nathalie Voit

Consumers are shifting back to pre-pandemic spending habits this year, TD Bank found in its annual Consumer Spending Index.

Credit card holders are at risk of overspending in 2022 as pent-up demand from the COVID-19 pandemic fuels excess spending on out-of-home activities. This year’s survey found that spending at restaurants, retailers, and entertainment venues is driving consumers to overspend.

Dining out was an area where many survey participants reported overindulging this year. The percentage of consumers who reported spending too much at restaurants and bars tripled compared to 2021 (30% vs. 10%). Meanwhile, 10% mentioned overspending on entertainment purchases such as concert or movie tickets this year, a category where none reported overspending in 2021.

Shopping was the primary factor for overspending, cited by 54% of survey participants. Overspending due to shopping in-person more than doubled from 12% in 2021 to 29% in 2022. Consumers reported getting distracted by other items in-store and preferring to acquire goods immediately instead of waiting for shipping. However, TD Bank said online shopping still accounts for the majority of overspending.

Consumers may also be spending more due to inflation. Groceries was the top expense category in the survey, with participants shelling out an average of $320 a month for food at home. However, grocery prices experienced significant inflation year-over-year, increasing by 10.0% in March, according to the Labor Department’s latest Consumer Price Index Summary.

Many cardholders are also falling prey to the Buy Now, Pay Later (BNPL) boom. According to the survey, nearly one-third of consumers (31%) have used BNPL to finance a purchase, including 45% of millennials. Of those who have used the payment strategy, almost half (47%) say they use it more now than they did one year ago, and over four in five (81%) expect to use it again in the next 12 months.

Despite its convenience for many cardholders, the payment technique can make it easier for consumers to spend beyond their limits and accrue debt.

“Buy Now, Pay Later can be a useful tool for making big purchases more accessible and budget-friendly by allowing consumers to spread payments over weeks or months,” said Mike Rittler, General Manager, Retail Card Services, Personal Lending and Business Development at TD Bank. “But like any form of borrowing, it’s important that consumers fully understand the repayment terms and schedules, so they avoid building up debt, paying unnecessary interest and spending beyond their budget.”

According to TD Bank, most people are looking forward to spending on travel in 2022 (34%), followed by home improvement (22%) and new technology (15%).