For many families, the holiday season is the most joyful time of the year — but also the most expensive. A new survey has revealed that 45 percent of American parents are willing to take on debt this year to pay for gifts, travel, and celebrations. That number has grown steadily since 2022, reflecting both rising prices and emotional pressure to create a “perfect” holiday for loved ones.
The emotional side of spending
Money experts often talk about budgets and interest rates, but rarely about guilt and love — two powerful forces behind overspending. Parents often feel an unspoken responsibility to deliver joy, especially after years marked by uncertainty and economic stress.
Dr. Lauren Phelps, a behavioral economist, explains that “holiday spending isn’t just about consumption — it’s about belonging.” In other words, people equate giving with caring. That emotional connection makes it easy to swipe a credit card for one more toy or upgraded flight.
But those choices come with a cost. The same survey found that nearly 60 percent of families who went into debt for the holidays last year were still paying it off six months later. With interest rates on credit cards hovering around 22–25 percent, that “joyful” debt quickly turns into financial regret.
Why debt feels “normal” in December
Social media has changed the rhythm of celebration. Instagram-worthy gifts, matching pajamas, elaborate decorations — all of these create a new standard that few households can afford in cash. The average U.S. household plans to spend about $1,750 on holiday-related purchases in 2025, up roughly 8 percent from last year.
Advertising also amplifies the problem. From Black Friday countdowns to “buy now, pay later” (BNPL) prompts at checkout, everything is designed to make spending feel easy and delay the pain of payment. Many families tell themselves they’ll “catch up in January,” but research shows that post-holiday debt often rolls into the next year — and becomes the foundation of chronic borrowing.
The real cost of BNPL and credit convenience
Buy Now, Pay Later services might look harmless — split payments, zero interest — but they can stack up across multiple retailers. A family juggling three or four BNPL plans effectively carries several short-term loans. Missed payments trigger late fees or credit-score hits.
Credit cards, meanwhile, can hide the pain behind reward points. Consumers justify larger purchases by chasing cashback or miles, forgetting that those perks rarely offset double-digit interest.
How to enjoy the holidays without debt
The goal isn’t to cancel joy — it’s to fund it consciously. Here are practical steps financial planners recommend:
- Start with a real number.
Before you shop, calculate what your household can safely spend without borrowing. If that total feels small, remember that memories matter more than receipts. - Use the 24-hour rule.
Before buying anything nonessential, wait a day. That pause breaks the emotional impulse and helps distinguish “want” from “need.” - Plan experiences, not excess.
A homemade dinner, a family movie night, or volunteering together often delivers more connection than expensive gadgets. - Explain budgets to kids.
Children understand honesty. Sharing limits teaches them that love isn’t measured in money — a lesson they’ll carry into adulthood. - Set boundaries on gifting circles.
Suggest gift exchanges or spending caps among extended family. Most people will secretly appreciate the relief. - Pay with debit, not credit.
When you can see money leaving your account in real time, you’re more mindful.
What experts say about long-term impact
Financial psychologists warn that repeated “holiday debt” cycles can reshape how children view money. Seeing parents stressed in January normalizes anxiety around finances. “You can build emotional wealth by modeling discipline,” says Phelps.
The holidays can absolutely be generous, beautiful, and memorable — just not at the expense of next year’s peace of mind. This season, the greatest gift you can give your family might be financial calm.