The holiday season is supposed to be a time of cheer, but for many Americans, it brings nothing but dread—especially financially.

According to NPR, roughly half of Americans are “dreading the holidays” this year due to added financial stress. High interest rates, stubborn inflation, and the resumption of student loan payments make it harder for people to get into the holiday spirit.

Apparently, having children compounds the problem as the costs of gifts and holiday travel continue to rise.

“[T]he holidays are just an enormously stressful time in about a hundred different ways. And when things are difficult financially, it just makes it even more stressful,” said Matt Schulz, the chief credit analyst for LendingTree.

Against all odds, Americans are still “doing” Christmas—they’re just going deeper into debt to make it happen.

Last year, a survey from LendingTree found that about a third of Americans planned to go into debt during the holidays.

The situation is a lot worse in 2023: A study by the Achieve Center for Consumer Insights found that half of respondents will use credit to pay for the holidays this year.

The survey results align with Creditnews’ reporting on consumer debt trends over the past three months. American credit card debt is at an all-time high, more consumers are requesting credit limit increases, and low-income households are close to maxing out their cards before Christmas.

It’s not hard to see why delinquencies are on the rise.

Although 37% of survey respondents in the Achieve study said they expect to pay down their holiday debt in just two months, there’s a good chance it’ll take them much longer.

Falling deeper into debt

There’s a mountain of data suggesting Americans are consistently going deeper into debt.

About one in four Americans takes on additional debt each month, according to a survey by Clever Real Estate. Roughly half (48%) use their credit cards for everyday living expenses such as food and rent.

Then there’s the fact that about one in ten U.S. credit cards are in chronic debt—meaning regular payments mainly cover interest and fees while barely scratching the principal balance.

Adding Christmas gifts to ballooning monthly expenditures is a powder keg for personal finances.

In this environment, it’s not difficult to see why Americans plan to reduce their holiday spending by 2.1% this year, according to the Conference Board. Spending on non-gift items is forecast to plunge by 16%.

Consumers are done splurging

Americans’ bleak outlook on the holidays could carry over into next year as a weakening jobs market and depleted savings start to affect their spending habits.

The Fed’s most recent “Beige Book” survey of regional businesses found that “Sales of discretionary items and durable goods, like furniture and appliances, declined, on average, as consumers showed more price sensitivity.”

And “some banks noted a slight uptick in consumer delinquencies,the report stated.

Consumer wallets account for 70% of GDP, so when spending dries up, the economy usually follows. Retailers are already warning of a “discretionary recession” as consumers become more selective in how they spend their money.