Millennials are facing their most financially challenging holiday season yet, with credit card usage on the rise, according to recent data. A three-year analysis of 2,000 American millennials has revealed that since 2020, credit cards have been used for the majority of holiday spending, ranging from 70% to 80%. This trend has been steadily increasing, with credit card usage accounting for a staggering 88% of millennials’ Black Friday spending this year, up from 79% in 2023 and 72% in 2020.
The Federal Reserve Bank of New York reported a record $1.17 trillion in credit card debt in the US in the third quarter of 2024, marking an 8.1% increase from the previous year. This surge in credit card debt reflects the challenges millennials are facing as they try to navigate the cost-of-living crisis and afford holiday expenses.
Piere, a personal finance app, predicts that this holiday season will be particularly difficult for millennials, thanks to persistent inflation that has driven up prices on everyday items. The cost of goods like eggs and ice cream has skyrocketed, putting pressure on millennials’ wallets. As a result, more than half of millennials in the US are feeling financially anxious this holiday season, with only 59% expressing confidence in their ability to cover all their Christmas expenses.
Yuval Shuminer, CEO and co-founder of Piere, attributes millennials’ financial struggles to a combination of factors, including high housing costs, student debt, and the lingering effects of the Great Recession in 2008. Many millennials entered the workforce during a period of economic instability, making it challenging for them to build wealth and save money.
While most millennials are not going into debt to splurge on luxury items, they are relying on credit cards to cover basic living expenses as the cost of essentials like groceries, gas, and rent continues to rise. With wages not increasing at the same rate, millennials are finding themselves in a difficult position, leading to increased reliance on credit cards and loans to make ends meet.
Overall, 54% of millennials acknowledge that the rising cost of living crisis will impact their holiday spending this year. As they navigate these financial challenges, millennials are finding themselves turning to credit cards more than ever before to cope with the pressures of the holiday season.
