One-Fifth of Consumers Blew Holiday Budgets and Credit Delinquencies Are Increasing, Survey Shows

New Credit Card Accounts, Usage, Debt and Late Payments Rise in the Wake of Increased Holiday Spending and Inflation, according to Credit Market Analysis by ScoreSense

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ScoreSense

Feb 24, 2022, 12:36 ET

DALLAS, Feb. 24, 2022 /PRNewswire/ -- Although nearly half of consumers used cash for holiday spending, about one-fifth of them blew their budgets, regret overspending and many may need to delay big purchases, according to a consumer survey by ScoreSense®, a credit score monitoring product. The survey findings, revealed in the "ScoreSense Report: Survey of Holiday Spending Behavior and Credit Outlook Analysis," focused on the aftermath of holiday spending, along with a two-year analysis of consumer spending and credit, to provide context for the current climate of increasing credit usage and delinquencies.

Starting the new year strong is hard when you’re carrying extra debt from the holiday season and prices keep rising. Our survey of 992 consumers in February 2022 shows how Americans are managing.

The two-year analysis of consumer spending and credit, which compared this year's post-holiday fallout to the holiday seasons of 2019 and 2020, reveals:

Credit card usage, surpassing credit limits, and delinquencies have increased over the past five months, influenced by economic factors such as inflation, the "Great Resignation," and increased holiday spending.
Major derogatory alerts – late payments of 180 days or more – including collections, repossessions, and foreclosures trended down over the past five years as consumers have been doing better at paying down debt. As delinquencies rise, derogatory alerts may begin to increase.
Inquiries and new trade accounts (Open New Account) have been decreasing since September 2021, which is in line with other reports from the credit and lending industry. People are shifting their spending and making fewer big purchases as uncertainty rises in the economy.

A consumer survey by ScoreSense, focused on holiday spending and future spending plans, revealed:

During the holidays, almost 30 percent of respondents spent more in 2021 compared to 2020.
Nearly 50 percent of respondents said holiday spending was paid with cash – not financed.
One in five people overspent their 2021 holiday budgets slightly or went well above.
Nearly one of five respondents (18 percent) regret how much they spent.
Twenty-eight percent of respondents spent more money during the 2021 shopping season compared to 2020.
Buy Now, Pay Later financing for holiday purchases was used by 9 percent of respondents.
Nearly 25 percent of respondents said their 2021 holiday spending added to their current debt.
Fifty percent of respondents said they had checked their credit scores in the last 12 months, an increase of 52 percent over 2020 when only 33 percent of Americans checked their credit in a year.

"We were surprised to find about half of consumers used cash for holiday spending but about one-fifth of those we surveyed spent too much and regret it. That's in line with what we're seeing as consumers return to the pre-pandemic levels of credit problems and lowering credit scores. This is troubling when you consider that many consumers will not receive their usual tax refunds to pay off holiday debt because they can't take the full write-offs for child tax credit or for college loan interest," said Carlos Medina, senior vice president at One Technologies, LLC., which offers ScoreSense. "We believe that these factors, along with inflation, will lead to more credit spending for basic living and that consumers will delay major purchases as long as possible. This is sadly a perfect storm for debt and credit problems, and the data is revealing it is happening now."

ScoreSense serves as a one-stop digital resource where consumers can access credit scores and reports from all three main credit bureaus—TransUnion^®, Equifax^®, and Experian^®—and understand what is most affecting their credit.

About One Technologies
One Technologies, LLC, harnesses the power of technology, analytics, and its people to create solutions that empower consumers to make more informed decisions about their financial lives. The firm's consumer credit products include ScoreSense^®, which enables members to seamlessly access, interact with, and understand their credit profiles from all three main bureaus using a single application. The ScoreSense platform is continually updated to give members deeper insights, personalized tools and one-on-one customer care support that can help them make the most sense of their credit. One Technologies is headquartered in Dallas and was established in October 2000. For more information, please visit onetechnologies.net.

SOURCE ScoreSense