Paying for the Holiday in the Face of Inflation

Inflation is playing a critical role in cash-strapped Americans’ holiday spending this year. According to a new Netspend survey of more than 2,000 U.S. shoppers, most (81%) say that they are more financially stretched this holiday season compared to last holiday season.¹ Inflation-related challenges are not new to consumers, with costs rising for practically every household expense over the past few months, like housing, food, and energy to name a few.² Many have already been forced to make decisions about where to cut back on everyday essentials and this trend is bleeding into the holiday season. Netspend’s holiday spending survey uncovered that many will be cutting back this holiday season. Here are the top areas where cash-strapped shoppers will be spending less: 

• Holiday gatherings: Nearly half (49%) of U.S. shoppers will likely have to stop or cut back on hosting holiday gatherings or a large holiday meal this holiday season due to no longer having the budget to do so.³  

• Gift giving: Thinking of those who they typically give gifts to during the holidays, 34%  say that their friends will not likely receive a gift from them this holiday season due to inflation.⁴ More than a quarter (28%) also said that their significant other and/or close family members (spouse, sibling, parent, child) living in their household will not likely receive a gift from them this holiday season due to inflation.⁵

• Charitable donations: 38% say they will likely have to cut back or stop charitable giving due to no longer having the budget.⁶

• Holiday decorations: Nearly one-third (31%) of cash-strapped survey participants say they will likely have to cut back or stop holiday decorations.⁷

But cash-strapped consumers won’t be eliminating all types of holiday spending, so how are they planning to cover the expenses that they are still planning to incur this season?

• By sticking to a budget and using cash, prepaid cards, or gift cards to pay for purchases. When shopping this holiday season, more than half say they intend to pay for purchases with cash (52%) or debit cards (51%).⁸ Shopping with cash they have on hand, literally or in the form of a debit card, provides consumers the reassurance that they won’t go over their spending limit this holiday season. Similarly, nearly one-third (32%) of participants say they would consider using a prepaid debit card after being shown a definition of a pre-paid debit card.⁹ Prepaid debit cards allow consumers to earn similar rewards on purchases without increasing their amount of credit card debt. Further, 40% say they are considering using gift cards to pay for holiday purchases.¹⁰

• By buying now, paying later. While less popular than paying in cash, some are looking for ways to buy now and pay later. A little more than one-third (35%) say they are planning to use credit cards to pay for holiday purchases. An even smaller portion (25%) say they plan to use buy now/pay later services, like PayPal pay in four, Klarna, Affirm.¹²

• By setting financial goals and cutting back in the New Year. Cash-strapped shoppers are planning to cut back on their spending in the New Year, especially when it comes to dining out (54%);¹³ shopping for clothing, jewelry, and cosmetics (44%);¹⁴ entertainment, like movies, concerts, and event tickets (39%);¹⁵ travel (38%);¹⁶ and groceries (26%).¹⁷

Many are also planning to re-commit to setting personal financial goals, like saving for college, saving for a vacation, and paying off student debt.¹⁸ While all cash-strapped individuals plan to reprioritize their financial goals in 2023, the top priority differs for every generation: 

• Saving for a comfortable retirement and paying off a mortgage are Gen Z’s highest ranked priorities¹⁹

• Saving for a child’s college education is the top priority among millennials²⁰

• Saving for a child’s college education and paying off student loans are the top priorities among Gen X-ers²¹

• Saving for a vacation is the top priority among baby boomers²²

There’s no question that inflation will change the way many experience the holidays this year. On the plus side, many will start the New Year with personal finance goals that may lead to more financial freedom in the future. 

To learn how a Netspend Prepaid Card Account and a Netspend All-Access Account can help consumers shop, pay bills, budget, and manage their money this holiday season and in the New Year, visit Netspend.com/prepaid-debit or Netspend.com/bank-account.

¹ Netspend’s Holiday Snapshot Research, November 2022, Slide 3

² CNBC, “Here’s the inflation breakdown for September 2022 — in one chart,” October 14, 2022 https://www.cnbc.com/2022/10/13/heres-the-inflation-breakdown-for-september-2022-in-one-chart.html

³ Netspend’s Holiday Snapshot Research, November 2022, Slide 7

⁴ Netspend’s Holiday Snapshot Research, November 2022, Slide 6

⁵ Netspend’s Holiday Snapshot Research, November 2022, Slide 6

⁶ Netspend’s Holiday Snapshot Research, November 2022, Slide 7

⁷ Netspend’s Holiday Snapshot Research, November 2022, Slide 7

⁸ Netspend’s Holiday Snapshot Research, November 2022, Slide 4

⁹ Netspend’s Holiday Snapshot Research, November 2022, Slide 8

¹⁰ Netspend’s Holiday Snapshot Research, November 2022, Slide 8

¹¹ Netspend’s Holiday Snapshot Research, November 2022, Slide 4

¹² Netspend’s Holiday Snapshot Research, November 2022, Slide 4

¹³ Netspend’s Holiday Snapshot Research, November 2022, Slide 9

¹⁴ Netspend’s Holiday Snapshot Research, November 2022, Slide 9

¹⁵ Netspend’s Holiday Snapshot Research, November 2022, Slide 9

¹⁶ Netspend’s Holiday Snapshot Research, November 2022, Slide 9

¹⁷ Netspend’s Holiday Snapshot Research, November 2022, Slide 9

¹⁸ Netspend’s Holiday Snapshot Research, November 2022, Slide 10

¹⁹ Netspend’s Holiday Snapshot Research, November 2022, Slide 11

²⁰ Netspend’s Holiday Snapshot Research, November 2022, Slide 11

²¹ Netspend’s Holiday Snapshot Research, November 2022, Slide 11

²² Netspend’s Holiday Snapshot Research, November 2022, Slide 11