Money Research Collective’s editorial team solely created this content. Opinions are their own, but compensation and in-depth research determine where and how companies may appear. Many featured companies advertise with us. How we make money.
6 Ways Americans Are Paying for Holiday Gifts This Year
By Pete Grieve MONEY RESEARCH COLLECTIVE
Consumers say they expect to spend just over $900 per person on holiday gifts, decorations and food this year.
As Americans look forward to the holidays, there’s one less-cheery concern that often looms: the cost. To manage holiday spending this year, people are planning to buy fewer gifts, shop at discount stores and redeem credit card rewards, among other strategies.
While families prepare for the extra costs that come with celebrating the holiday season, concerns about tight budgets and the risk of overspending are prevalent. Consumers say they expect to spend just over $900 per person on holiday gifts, decorations and food this year, which is an increase of $25 from 2023, according to a new survey by the National Retail Foundation.
Meanwhile, nearly half of adults say they’re living paycheck to paycheck, and 55% are worried about the rising cost of the holidays, according to a separate survey out Thursday from Thrivent.
Companies like Target are trying to cater to budget-conscious holiday shoppers. The mega-retailer just cut prices on 2,000 items, and it’s promoting a larger selection of gifts under $20 this season. Online retailers with competitive pricing and discount stores are expected to see a bump in overall holiday spending, while households also continue to turn to new financing options to fund gifts for their loved ones.
Here’s how Americans say they’re planning to afford the holidays:
Shopping at discount stores
Nearly 6 in 10 consumers consumers intend to do more of their holiday shopping at discount stores compared to last year, according to new research from Bank of America.
“That way they’ll get more out of their money, and it’ll enable them to cover more of their holiday shopping without sacrificing the gifts they want to get,” Mary Hines Droesch, a head of banking products at the company, said in a presentation of the research.
The bank’s customers plan to shop from a variety of types of discount retailers, including wholesalers and big box stores (54%), dollar stores (39%), discount department stores (37%) and outlet malls (21%).
Purchasing fewer — or less expensive — gifts
Cutting back on gifting is the simplest way to save money, but it’s never an easy decision for families, especially those with children. Thrivent’s survey research shows many households do plan to put their finances first this year, with 33% of respondents reporting they’ll buy cheaper gifts and 31% saying they’ll buy fewer gifts.
Buying now, paying later
A September report from Adobe Analytics forecasted that Buy Now, Pay Later (BNPL) spending would increase 11.4% over last holiday season.
Payment options through third party services like Klarna and Affirm can give consumers extra time to come up with the funds for a purchase, and you can usually avoid most fees with if you pay four installments spread out two weeks apart. However, using buy now, pay later for longer term financing can get quickly get expensive, and relying on BNPL too much can damage your credit.
Before using any BNPL service, make sure you know how much interest you’ll owe and consider how it may affect your overall credit.
Thrift finds and DIY gifts
While some holiday gift givers prefer the convenience of gift cards or cold hard cash, you can also give a thoughtful gift without spending much money.
Droesch suggests making do-it-yourself gifts like photo albums, while the Thrivent report notes that many Gen Zers plan to shop at thrift stores for affordable (and sustainable) gifts. And not just physical shops: Online thrift stores on apps like Depop and Poshmark have surged in popularity among younger generations for their convenience and large inventories of curated clothing.
Redeeming credit card rewards
According to Bank of America, 40% of its customers intend to use credit card rewards to pay for all or part of their holiday shopping. The bank says it expects to see an uptick in reward redemptions at Amazon and PayPal checkouts.
Using credit card rewards to pay for holiday gifts can be an effective strategy to keep your card balances down, but remember that your rewards are valuable. You should always compare your available redemption options to see which one will stretch your hard-earned points the farthest.
Taking on debt
While many of the strategies above can help consumers budget for the holidays, taking on debt is a last resort. Morning Consult research shows that 1 in 5 shoppers expect to take on debt this season.
It often takes over a year to pay off holiday credit card debt, which means overspending now could dampen next year’s celebrations.
Reduce payments and make debt manageable with a Debt Relief program
Recommended for debts above $20,000
- Fast & easy online registration with 24/7 customer assistance
- Free, no-obligation evaluation
- Low monthly payments with no upfront fees
- A+ rating from the BBB
- $20 Billion+ debt resolved
- Helping people overcome debt since 2002
Serving customers with $20,000 of debt and more
- 100% free, no-risk consultation
- No upfront enrollment fees
- Get out of debt in 24-48 months
- Applying won’t affect your credit score
- A+ BBB rating
- Building financial well-being since 2011
Best for people with $10,000 in unsecured debt or more
- Fast and easy application process
- No upfront fees
- Free consultation, 100% confidential
- Become debt-free in 24 to 48 months
- AFC accredited and A+ rated by the BBB
- Resolving debt since 2009
More from Money:
Best Credit Cards of October 2024
2025 Tax Brackets: IRS Bumps Up Income Cutoffs and Standard Deduction
Will Inflation Be Worse Under Trump or Harris? Here’s What Economists Say
Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.