here's how much $1,500 worth of holiday debt actually costs
I did the math so you don't have to ¯\_(ツ)_/¯
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Hello to the 710 hotties subscribed to this newsletter! I’m so grateful for all of your support, and for everyone who has spread the word about Queer & Trans Wealth. Seriously, thank you, thank you, thank you!
Year after year, “Thanksgiving” asks us to dissociate from the genocide of Native Americans that is the foundation of the United States. This year, in particular, we are also being asked by mainstream media and elected politicians to dissociate from another genocide happening in Gaza.
All of that, plus navigating complicated family dynamics as a queer & trans person… enduring chaotic and expensive travel across the country… surviving the hyperconsumerism of Black Friday weekend with your savings account intact… it’s a lot.
If you decide to put holiday gifts on your credit card, or if there’s an amazing deal that seems like it might be worth dipping into your savings account, I don’t blame you. It’s an emotionally tense holiday already, and, sometimes, the best we can do is zone out and wrap presents while watching the latest episodes of the Great British Bakeoff.
This will always be a judgment-free zone, but, at the risk of being a complete killjoy, I want to keep you informed about what your monthly payments will look like if you use credit cards or Buy Now, Pay Later (BNPL) services like Afterpay, Affirm, and Klarna.
Before swiping your credit card, please take a minute to look at your budget and see if you’re ready to take on an additional debt payment of up to $269 per month for the first six months of 2024.
If you decide to make an 18-month payoff plan, consider whether you’re really willing to put another $314.18 in the pockets of greedy credit card companies who are happy to profit off of your financial instability.
Methodology:
The average American accrued $1,550 in holiday shopping debt in 2022.I rounded $1,550 down to a clean $1,500. The same survey shows that 1 in 3 Americans will take at least five months to pay off the debts accrued during the holidays. (Source: LendingTree)
The average credit card APR (interest rate) is 24.56%. I rounded that up to 25%. (Source: LendingTree)
To calculate monthly payments, I used Credit Karma’s Debt Repayment Calculator.
If you’re doing your holiday shopping online, you may also be tempted to use Buy Now, Pay Later (BNPL) services. BNPL loans typically divide your total purchase into 4 installments with the first installment due at checkout.
If you miss any of those 4 installments, you may be charged a late fee or given the option to pay off the loan in 6, 12, or up to 60 months with an interest rate ranging from 0% to 36%.
According to an April 2023 Experian report, the average purchase amount of a BNPL loan is $132. Assuming that you paid the first installment ($33 or 1/4 of the total purchase price) and that you aim to pay the debt off in 6 months with an interest rate of 36%, your monthly payments will be roughly $18.
At first glance, it may not seem like much to add $18 to your monthly budget. That’s only 2-3 morning coffees!
However, the same Experian report shows that some BNPL purchases exceed $1,000 for electronics or other big-ticket items. Here’s what that same 6-month payment plan will look like, assuming that you paid the first installment of the loan ($250 or 1/4 of $1,000).
Alternatives to taking on debt during the holidays:
If you absolutely must, try opening a credit card with a 0% introductory APR for up to 15 months to avoid paying interest on your holiday debt. Again, this is an absolute last resort that needs to be used wisely.
Skip giving gifts ¯\_(ツ)_/¯ Take this advice with a grain of salt because, personally, giving gifts is not my love language. Like I said in my previous newsletter, the holiday season is the perfect time of year to question your relationship to consumerism altogether. Your money is better spent sending medical aid or food to Palestinians in Gaza.
Literally anything else. Use crafts in your home to make collages or art or letters for your loved ones. You can even make cute little coupons for acts of service, like babysitting your friends’ kids for a few nights. There are so many ways to be generous this holiday season that don’t involve going into debt.
As you can probably tell from this newsletter, I don’t celebrate “Thanksgiving,” but I do hope you find some time to rest during this long weekend. I hope that you have a good time with your friends, your family, your chosen family.
I’ll see you next week, hotties!